KEY POINTS:
The New Zealand dollar criss-crossed the US79c mark today amid positive sentiment on the high-yielding currency.
By 5pm, the kiwi had risen to a month high of US79.16c from US78.44c at yesterday's close. Aside from December, the kiwi was previously at these levels in July when it stretched to a post-float high above US81c.
Against the Australian dollar, the kiwi rose to A87.89c from A87.59c, despite the Aussie's own gains above US90c.
The kiwi was also firmer against the euro and sterling, and steady against the yen. The trade weighted index rose to 72.60 from 72.20.
"It seems that expectations of the US Federal Reserve cutting rates quite aggressively to prop up that economy is effectively underwriting markets at the moment, and that's tended to boost the likes of the kiwi dollar," said Westpac currency strategist Michael Gordon.
The NZIER's quarterly business opinion survey today gave the kiwi a slight lift with its implications for higher interest rates.
While the survey showed a net 26 per cent of firms expect the situation to deteriorate in the next six months, little changed from the previous survey, companies' pricing intentions rose and the labour market tightened another tick.
Third quarter inflation data on Thursday is expected to show the annual rate at the top of the Reserve Bank's 1-3 per cent target band.
Westpac expected to the kiwi to return above US80c this year, and sentiment remained fairly positive for the currency.
"High relative interest rates always help - they haven't been as influential in the last six months as they were in 06 and early 07, but they have widened substantially and that still provides some appeal," Mr Gordon said.
The US dollar stayed near a seven-week low against the yen and the euro on concern that weak US bank earnings will push the economy closer to recession, fuelling expectations for more Fed rate cuts.
The largest US bank, Citigroup, is likely to announce a dividend cut today, a writedown of as much as US$20 billion and more than 20,000 job cuts, the Wall Street Journal reported on Monday.
A 50-basis point Federal Funds rate cut would put the benchmark US rate below the key euro-zone interest rate for the first time in more than three years.
Currency rates:
NZ dlr/US dlr US79.16 US78.44
NZ dlr/Aust dlr A87.89c A87.59c
NZ dlr/euro 0.5321 0.5297
NZ dlr/yen 85.39 85.34
NZ dlr/stg 40.44 40.05p
NZ TWI 72.60 72.20
Australian dollar US90.06c US89.53c
Euro/US dollar 1.4878 1.4808
US dollar/yen 107.86 108.79
- NZPA
