The New Zealand dollar advanced, stopping shy of 66 US cents, as investors sought higher-yielding currencies in an environment where many central banks are looking to ease policy.
The kiwi rose as high as 65.90 US cents, and was trading at 65.82 cents at 8am in Wellington, from 65.38 cents at 5pm yesterday. The trade-weighted index gained to 71.71 from 71.30 yesterday.
Investors are favouring currencies with higher interest rates, such as the New Zealand dollar, where the benchmark is at 2.75 percent, and the Australian dollar where rates are 2 percent. That compares with Europe, where the European Central Bank is expected to take interest rates even further into negative territory when it meets this week, and Japan with a benchmark near zero, where Bank of Japan governor Haruhiko Kuroda said yesterday the central bank won't hesitate to ease monetary policy further to achieve its inflation goal quickly.
The kiwi touched 62.41 euro cents, its highest level since June, and was trading at 62.29 cents at 8am from 61.75 cents yesterday. It touched a month high of 81.25 yen and was trading at 81.04 yen at 8am from 80.23 yen yesterday
"New Zealand dollar was a key beneficiary, along with Australian dollar, of the move higher in high-yielders," Bank of New Zealand currency strategist Raiko Shareef said in a note. "NZD/USD flirted with another test of the 0.6600 level, but that remains strongly resistant. We still favour selling NZD/USD rallies."
In New Zealand today, third-quarter terms of trade data is published at 10:45am and the latest monthly house values for November are released by Quotable Value at midday. Tonight, all eyes will be on the GlobalDairyTrade auction where NZX milk futures are signalling an increase.
