The Australian dollar gave its kiwi counterpart wings to fly yesterday, despite a mixed day on the economic news front.
At 5pm the New Zealand dollar had risen US44.18c, up nearly half a cent on its opening figure and well up on Wednesday's closing of US43.75c.
Its rise mirrored the aussie's which climbed to US53.44c, (US53.09c at Wednesday's close).
"It shows that the New Zealand dollar's moved up to a new range, albeit a little higher than what we were used to, and we're going to find good support around the US43c highs we saw in January," said Earl White, a director with Bancorp Treasury Services.
Dealers said positive business confidence figures released yesterday would not have hurt but the key driver for the surge came from Australia, where healthy employment data had kept an already interested market stoked.
The aussie story had a lot of good press, defying even those who thought it had run its course, one strategist said.
Back in New Zealand, the Institute of Economic Research's quarterly survey of business opinion said confidence had leapt to a net 23 percent of firms expecting conditions to improve, compared with a negative net 10 percent in December.
However, Mr White could not help noting the irony of the markets ignoring a Rabobank survey showing rural confidence remained at two year lows.
"The market is looking for good news and ignored bad news ... It was only a few months ago we were saying 'Thank God' for the rural sector ... now we're saying it doesn't matter that commodity prices are falling, that export receipts are falling.
Mr White said that with falling commodity prices, the prospect of higher interest rates and a currency up between 5 and 10 per cent, the export sector was not that attractive. But the market had decided the domestic economy had enough steam to overcome these factors.
"The interest rates markets are looking at anything that implies higher interest rates ... and the currency markets have decided that the currency is going to be reasonably firm - anything that supports that view is being focused on and anything that doesn't, they just ignore."
He picked the kiwi to trade between US43.95c and US44.30c. If it got through that barrier, the kiwi was "really on its way to US45c".
On the crosses, the kiwi was trading at A82.67c (A82.40c at Wednesday's close), 0.5024 euro (0.4965), 58.07 yen (57.00), 30.79 pence (30.34) and 0.7376 Swiss francs (0.7281).
The aussie was at $NZ1.2094 ($NZ1.2136).
The monetary conditions index tightened to minus 483 (minus 542), the trade weighted index was at 53.21 (52.63), and 90-day bank bills were at 5.68 per cent (5.64).
On the debt market, the April 2004 bonds were at 6.42 per cent (6.33), the November 2006s were at 6.87 per cent (6.77) and the November 2011s at 6.97 per cent (6.90).
- NZPA
<i>Currency:</i> Kiwi gets chance to make a break for US45c
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