The New Zealand dollar bulldozed to fresh five-year highs against the US dollar yesterday, driven by strength in its European trading mate.
By 5pm the kiwi was at US57.97c, from US57.59c at Friday's close, having traded as high as US58.04c during the local session.
"It's the same old story really. The majors have been driven up by the euro's strength which is really reflective of US dollar weakness across the board," Bank of New Zealand currency strategist Sue Trinh said.
The kiwi has risen over 2 US cents, or 3.5 per cent in value, since the beginning of the month as it hitched a ride with the ascending euro.
In offshore trade during the weekend, the euro extended its four-year high against the greenback, supported by the yield advantage European assets hold over US assets.
Thursday's decision by the European Central Bank to leave benchmark interest rates at 2.50 per cent, double those in the United States, preserved the main reason for investors to continue putting their cash into European assets.
The Australian dollar was equally buoyant yesterday, touching US65.06c -- its highest level since January 2000 -- before settling at US64.90c by 5pm.
Ms Trinh said local data yesterday showing retail sales grew at a slower-than-expected rate in the March quarter, pointing to a cooling economy, were largely ignored by the market.
"People already expect the Reserve Bank to ease (interest rates, at its next review in June) anyway so the fact that you've got weaker data just affirms that view," she said.
"The focus right now is on the US dollar and what's going on over in the US."
She expected the kiwi to trade between US57.90c and US58.30c overnight.
"We've been of the view for a long time that the US dollar is in a structural decline. We're quite bullish for the kiwi and the dollar bloc on a multi-month basis.
"The only thing to watch out for is that speculative positioning is getting a little bit skewed... it's almost ripe for a bit of a corrective move. (But) any dips in the kiwi, euro, aussie, remain buying opportunities."
The euro was buying US$1.1561 at 5pm in Wellington, its highest level since it was launched in January 1999.
On the other key crosses at 5pm, the kiwi was buying 67.79 yen (67.60), 36.08 pence (35.90), 0.7580 Swiss francs (0.7553), and 0.5018 euro (0.4996).
The monetary conditions index was at plus 234 (218), the trade-weighted index was at 61.70 (61.49) and 90-day bank bill yields were at 5.47 per cent (5.47).
On the bond market, the February 2005 yields were at 5.11 per cent (5.12), the November 2006s were at 5.27 per cent (5.29), and the November 2011s were at 5.62 per cent (5.64).
The New Zealand dollar slipped to A89.32c by 5pm yesterday, from A89.57c at Friday's close.
- NZPA
<I>Currency:</I> Kiwi bulldozes to fresh five-year highs
AdvertisementAdvertise with NZME.