NZ dollar gains as greenback weakens on sputtering US growth

Photo / Dean Purcell

The New Zealand dollar rose against the greenback after weaker US housing market figures stoked speculation the pace of recovery is slowing in the world's biggest economy.

The US House Price Index data showed property values fell 5.8 per cent in the year ending March 31. Pending home sales numbers added to concerns, with the index falling to 81.9 in April, an 11.6 per cent decline from the previous month.

That comes as investors begin to contemplate the next move for US policy makers, with the Federal Reserve's US$600 billion asset purchasing programme set to expire at some point in June.

The Dollar Index, a measure of the greenback against a basket of six major currencies, recently traded at 74.75, dropping below the key 75 level for the first time in almost a month.

"There are people out there looking at the lofty levels of the kiwi dollar and thinking a correction is in order, but while we're seeing further evidence of a struggling greenback that's unlikely to occur," said Mike Jones, a markets strategist with Bank of New Zealand.

The kiwi recently traded at 81.81 US cents, up from 81.58 cents on Friday in New York, and was unchanged at 70.54 on the trade-weighted index of major trading partners' currencies.

It was little changed at 76.30 Australian cents from 76.37 cents last week, and edged up to 66.13 yen from 66.06 yen. It fell to 57.16 euro cents from 57.27 cents on Friday, and dropped to 49.60 pence from 49.62 pence previously.

The government is set to release Overseas Merchandise Trade data for April today, which currency traders will be following closely for a read on the kiwi dollar's direction. The market is expecting the trade surplus to come in at $600 million for the month.

The kiwi dollar made trader between 81.40 US cents and 82.30 cents, Jones said, with the bias towards the upside.