NZ dollar rises as stocks pare losses on Greek funding hopes

The NZ dollar rose against the greenback, following global equities higher on Friday. Photo / Dean Purcell

The New Zealand dollar rose against the greenback overnight, after the latest bid by Greek officials to convince international lenders that they had a credible financial plan to narrow their deficit saw Wall Street pare losses.

The New Zealand dollar recently traded at 82.74 US cents, up from 82.30 cents yesterday, and rose to 72.57 on the trade-weighted index of major trading partners' currencies from 72.20 previously.

US stocks rallied from their lows but still closed in the red amid reports Greece was meeting with the European Union, International Monetary Fund, and the European central bank to convince them it has the necessary austerity measures in place to secure the next tranche of bailout funds.

The Standard & Poor's 500 Index fell 0.8 per cent to 1,206.74, while Europe's Stoxx 600 closed 2.3 per cent lower at 224.96.

That snapped the risk-off sentiment in the market, with demand for growth-linked currencies such as the kiwi surging in early morning trade.

There is speculation that "Greece is close to a deal and that triggered a reversal in US equities which were down almost 2 per cent during the day," said Dan Bell, a senior currency strategist at HiFX. "This move has seen the kiwi outperform against the Aussie, with some stop loss levels being triggered on the cross."

On the crosses, the kiwi recently traded at 80.73 Australian cents, up from 80.32 cents yesterday, and fell to 63.15 Japanese yen from 63.22 yen previously. It rose to 60.24 euro cents from 60.13 cents yesterday, and gained to 52.51 pence from 52.31 pence previously.

The Reserve Bank of Australia will today release the minutes from its latest policy meeting, which are expected to further illuminate their dovish view of the economy but reinforce its commitment to keep interest rates on hold at 4.75 per cent for the near term. That's at odds with the market view, with traders betting there is an 80 per cent chance of a 25 basis point cut in October, according to the Overnight Index swap curve.

The kiwi may trade between a range of 81.50 US cents and 83.50 cents today, Bell said, with the bias tipped towards the upside.