Kiwi up almost 1c on Europe news

The New Zealand dollar held above 77USc yesterday ahead of US employment data that will probably set the tone among investors who are still struggling to cast off their pessimism over the state of Europe's sovereign indebtedness.

The kiwi dollar rose to 77.31USc at 5pm, from 77.18USc at 8am, and was up from 76.35USc late Thursday.

The European Central Bank stoked investors' appetite for higher-yielding, riskier assets after it announced a €40 billion ($69.5 billion) covered bond programme and offered one-year funding to the region's banks.

The Bank of England also restarted its quantitative easing programme. That comes ahead of the US non-farm payrolls data, which will probably show the world's biggest economy added 55,000 jobs last month, according to a Bloomberg survey of economists.

"There's a 5 per cent chance we've seen the bottom in equity markets, and non-farm payrolls will be key," said Tim Kelleher, head of institutional FX sales at ASB Institutional. If stock markets have reached the bottom, "we'll see the kiwi squeeze up towards 80USc".

Kelleher said support for the kiwi was underpinned by real demand from Middle Eastern buyers, and that traders were probably covering their short positions, where they sell an asset in the expectation they can buy it at a cheaper price. Trading will probably be heavy during the New York session with the United States set to celebrate Columbus Day.

The trade-weighted index rose to 68.92 from 68.45. The kiwi fell to 78.90Ac from 79.24Ac on Thursday.

The kiwi climbed to 59.19 from 58.58 but eased to 57.45€c from 57.53€c. The local currency rose to 49.96p from 49.49p.

US77.31
What the NZ dollar was buying at 5pm