NZ dollar pushes up on better global sentiment

Photo / Dean Purcell

The New Zealand dollar pushed to one-week highs against the major currencies and slipped to a two-week low against its trans-Tasman counterpart as sentiment toward the global economy improved.

Around 8am today the kiwi was buying US72.61c, having climbed to around US72.90c early on Saturday.

BNZ markets strategist Mike Jones said investors' fears about a double dip recession in the global economy had been soothed last week by better corporate earnings in the United States and stronger than expected economic news from the euro zone and Britain.

The broad CRB index of commodity prices rose 1.7 per cent last week, while the MSCI world equity index jumped 2.6 per cent.

Against a backdrop of rising equity markets and improved risk appetite, investors had shunned safe haven currencies such as the greenback and yen last week in favour of growth sensitive currencies such as the NZ and Australian dollars, said Jones.

By today's local open, the NZ dollar was at 63.69 yen, close to its one-week high, and up from 62.93 yen at 5pm on Friday. The kiwi also peaked at 0.5676 euros, although by 8am today had slipped to 0.5639 which was still up on the 0.5616 euros at Friday's local close.

The euro edged up against the US dollar after most euro zone banks passed stress tests, though analysts worried the checks weren't strict enough to reveal the true health of the sector.

The kiwi slipped in a volatile session to a low A80.85c against the aussie early Saturday, although by 8am today was up to A81.20c, little changed from its 5pm Friday level. The trade weighted index was up to 68.09 at 8am from 67.90 at Friday's local close.

Jones said that while direction for the NZ dollar against the greenback had largely come from offshore equity markets during the past month or so, for this week a more local focus was likely.

Thursday's decision on the official cash rate would hog most of the limelight, with most analysts and market participants seeing a strong chance the Reserve Bank would hike the OCR a further 25 basis points to 3 per cent.

- NZPA