NZ dollar rises against fast falling euro

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The New Zealand dollar rose to an 11-week high against the euro, which was driven broadly lower by renewed worries about Greek debt and another sell-off in the commodities market.

The kiwi peaked at 0.5563 euro early today, according to Reuters data, climbing from 0.5523 at 5pm, and easing from the peak to 0.5550 at 8am.

The euro dropped to a three-week low against the US dollar, firmly breaking below its 50-day moving average around $US1.43, which traders are likely to take as a sign of more losses to come.

The euro's drop accelerated after steep losses in stocks and commodities led to a stampede for the safe haven US dollar.

Speculation over whether Greece will receive more bailout funding kept risk appetite volatile as investors continued to price in a high probability that the country will eventually need to restructure its debt.

Broad US dollar strength continued, with the kiwi down to US78.83c at 8am from US79.50c at 5pm, and falling to 63.87 yen from 64.24.

The kiwi did rise to A73.69c from A73.19c, while the trade weighted index was 68.18 at 8am from 68.29 at 5pm.

BNZ currency strategist Mike Jones said fear and volatility returned to markets overnight as a sea of red in commodities markets triggered a bout of risk aversion.

Oil prices started to lose ground yesterday after weaker than expected data on Chinese industrial production in April.

Falling commodity prices sapped demand for commodity-linked currencies such as the NZ dollar, while the greenback and yen outperformed on safe haven demand, Jones said.

- NZPA