By DITA DE BONI
The New Zealand dollar gained 1c yesterday as sentiment flowed away from the United States on expected weak economic statistics due out overnight.
Little more than 24 hours after Federal Reserve chairman Alan Greenspan cut US interest rates to try to give the economy a soft landing, the kiwi recovered the upward trend that began in December and accelerated this week.
The kiwi rose to 45.10USc by the 5 pm close, from 44.03USc at Thursday's close.
It was not alone. The Australian dollar and the euro also gained as the greenback weakened.
Residual concern in the United States over dwindling corporate profits and the general economic outlook loomed larger on Wall St a day after the Fed moved.
Bad news was also expected in the December employment figures, due out last night (New Zealand time).
The New Zealand dollar is one of the best-performing currencies in the past three months, gaining 11.8 per cent against the US dollar.
A survey of analysts by Reuters forecast it would rise as high as 47.6USc.
A spokesman from the HSBC said the kiwi had benefited from analysts and investors taking a closer look at the US financial markets overnight, and from a general feeling that the US economy was slowing much faster than originally forecast.
Vaughan Harvey, of Deutsche Bank, said that the kiwi had been dragged up by the euro and the Australian dollar, which also reached its highest point in four months yesterday at 57.04USc.
"The [NZ] dollar is a good buy, both domestically and [overseas], with plenty of momentum at the moment. It should go even higher."
He said that overseas interest in the shorter end of the interest rate curve had also been considerable.
But the ANZ Investment Bank said that the wild swings over the past 24 hours had confounded its short-term analysis.
"It is still difficult to gauge what spin the market wants to place on the yield differential versus growth outlook."
The stronger dollar had some repercussions on the stock market, most notably on Fletcher Energy, which closed 5c weaker at $8.21. The company is in the process of being sold to a Shell/Apache consortium in a US-denominated deal.
Dollar quickly back on its upward course
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