NZ dollar rises ahead of inflation data

Photo / Dean Purcell

The New Zealand dollar rose against most major currencies, coming within a whisker of 80 US cents, supported by the ongoing surge in soft commodity prices, with today's first-quarter inflation numbers likely to add more steam to the currency.

The kiwi dollar climbed to 79.99 US cents in New York on Friday, a three year high, before paring back marginally, as the ongoing surge in commodity prices continued push demand for the New Zealand dollar.

The Consumer Price Index is expected to show a quarterly rate of 1 per cent and annual inflation of 4.6 per cent.

Traders will be watching to get a read on when the Reserve Bank is likely to remove the emergency monetary policy stimulus, put in place to soften the impact of the Canterbury earthquakes on the local economy.

"Today' CPI data should give us lead to push through 80 US cents, particularly if we get a 5 per cent annualised inflation number versus the 4.6 per cent the market is expecting," said Alex Sinton, a senior currency deal at ANZ New Zealand.

"Either way the kiwi is going to push higher whether people want it there or not."

The kiwi rose to 79.754 US cents from 79.45 cents in New York on Friday, and climbed to 69.21 on the trade-weighted index of major trading partners' currencies from 68.88.

It rose to 75.64 Australian cents from 75.52 cents last week, and gained to 66.29 yen from 65.96 yen.

It rose to 55.33 euro cents from 54.91 cents on Friday, and gained to 48.84 pence from 48.61 pence previously.

China's continued track of policy tightening will also be in the spotlight after the central bank raised reserve requirements by 50 basis points for all depository financial institutions over the weekend.

The hike, which marks the fourth rise this year, comes as the world's second largest economy has hauled out every tool at its disposal to cap its rampant inflation. China is New Zealand's second biggest trading partner.

The New Zealand is likely to trade between a range of 79.25 US cents and 80.25 cents today, Sinton said.

- NZPA