Kiwi rises on eve of CPI report

File photo / Dean Purcell

The New Zealand dollar rose slightly yesterday and attention is turning to the release of the Consumers' Price Index for the December quarter today.

By 5pm the NZ dollar was at US77.41c, up from US77.17c at 5pm on Tuesday. Selling of the NZ dollar against the euro and sterling helped drag the NZ dollar down from US77.40c on Tuesday night but it recovered yesterday.

A current theme is strength in the euro, particularly against the US dollar, though doubts remain about Europe's debt problems.

By 5pm the NZ dollar was buying €0.5755, down from €0.5768 at 8am and €0.5808 at 5pm on Tuesday.

BNZ currency strategist Mike Jones said encouraging European economic data had seen markets tentatively bringing forward the expected timing of rate rises by the European Central Bank and the Bank of England.

Dairy commodity prices edged higher at Fonterra's overnight online auction, with the globalDairytrade trade-weighted index rising 1.2 per cent and the average winning price up to US$3960 ($5132) from US$3908 a fortnight ago.

The auctions are run fortnightly and the latest auction has reinforced the ongoing story of strong commodity prices.

ANZ said recovering demand and stronger food prices might challenge the Reserve Bank of New Zealand's benign inflation assessment.

ANZ expect a 2.3 per cent increase in the fourth quarter CPI index, taking annual CPI inflation to 4 per cent. Higher GST is expected to contribute 2 percentage points towards the 2.3 per cent quarterly increase.

The trade-weighted index was 69.20 at 5pm from 69.39 the day before.

- NZPA