NZ dollar surges against weaker greenback

Photo / Dean Purcell

The New Zealand dollar surged against the greenback overnight amid broad-based weakness in the US currency, more than reversing losses after yesterday's weak July retail sales data.

The kiwi peaked early today at US73.95c. That was equal to the highpoint reached seven weeks ago which was the NZ dollar's best showing against the greenback since January.

By 8am the kiwi had weakened to US73.63c, still ahead of the US73.35c level immediately before the retail sales figures were released yesterday, and up from the US72.91c at 5pm yesterday.

The US dollar fell sharply against major currencies, touching a 15-year low below 83 yen as a break of technical support levels in several pairs sparked a stampede out of the US currency.

A rally by the euro to a one-month peak against the US dollar also grabbed traders' attention after it broke out of its range of the past six weeks on the upside.

The euro's advance began after US retail sales rose more than expected in August, notching the largest gain in five months.

BNZ markets strategist Mike Jones said the NZ dollar had been dragged along for the ride as broad-based US dollar weakness propelled most of the major currencies higher overnight.

US bond yields had dived amid renewed speculation the US Federal Reserve would be forced to restart quantitative easing in an attempt to revive the US recovery, he said.

The NZ dollar pushed higher to 61.18 yen at 8am from 60.78 at 5pm, while being little changed at A78.17c against the Australian dollar and at 0.5659 euro. The trade weighted index rose to 67.52 at 8am from 67.24 at 5pm.

- NZPA