NZ dollar rises on day of positive news

A day after falling in reaction to the collapse of South Canterbury Finance the New Zealand dollar rose in reaction to strong economic data in Australia and China.

The NZ dollar was at US70.19c at 5pm from US69.72c at 8am and US70.30c at 5pm yesterday.

Both the Australian sharemarket and Australian dollar rose on news that the Australian economy expanded 1.2 per cent in the second quarter, beating forecasts of a 0.9 per cent rise. The Australian Bureau of Statistics also revised higher first quarter GDP growth to 0.7 per cent from 0.5 per cent.

Economists said the data also challenged the view that Australia has a two-speed economy dominated by a mining boom, while the household sector lagged.

This positive note was further reinforced by news that China's manufacturing sector rebounded in August.

"Aussie GDP was a good strong number," said Imre Speizer, senior currency strategist at Westpac. "We followed the aussie dollar to some extent but the cross suffered obviously."

Against the Australian dollar, the NZ dollar was around four month lows. It was at A78.11c at 5pm from A78.55c yesterday.

The Australian dollar rose to be US89.82c at 5pm from US89.42c yesterday.

Futures prices were also indicating a higher US sharemarket and investors are waiting for tomorrow's Fonterra internet milkpowder auction.

The ANZ commodity price today showed weak commodity prices but the auction will provide a more up to date picture.

The NZ dollar was affected by South Canterbury Finance's decision yesterday to call in the receivers, resulting in the Government coughing up $1.6 billion to bail out investors. The Government expects to claw much of that money back.

The NZ dollar was buying 0.5524 euro at 5pm today from 0.5550 yesterday, and 59.20 yen from 59.21.

The trade weighted index was 65.36 at 5pm from 65.80 yesterday.

- NZPA