Australian move lifts NZ dollar

After being supported by a rise in official Australian interest rates late yesterday, the New Zealand dollar benefited further overnight from higher commodity prices and a weaker United States currency.

By 8am, the kiwi was buying US72.82c, around its highest level in nearly a week, from US71.80c at 5pm yesterday.

The US dollar slid broadly as waning worries about Dubai's debt, along with the Australian rate hike and European economic data dimmed the greenback's safe-haven allure and investors sought higher returns.

The yen also weakened broadly after the Bank of Japan announced more monetary easing measures to fight deflation and help the ailing economy, while holding interest rates.

At today's local open the NZ dollar was buying 63.08 yen from 61.59 at 5pm today. The kiwi was also up to 0.4819 euro at 8am from 0.4782 at the local close.

Against the Australian dollar, the kiwi topped A78.90c late last night - its highest level in a week - but by the local open it was down to A78.59c, little changed from its 5pm level. The trade weighted index lifted to 64.40 at 8am from 63.88 at 5pm.

ANZ bank said it expected the NZ dollar to be well supported throughout today as it garnered further support from the general environment.

The NZ dollar benefited throughout the night from higher commodity prices and a weaker US dollar, having found support from yesterday's Australian cash rate rise from 3.5 per cent to 3.75 per cent, ANZ said.

BNZ Capital strategist Mike Jones said buoyant equity markets and recovering risk appetite spurred demand for growth-sensitive currencies such as the NZ dollar, at the expensive of safe-haven currencies such as the greenback and yen.

The strong night for commodity prices, which added to demand for the NZ dollar, included Fonterra's latest online auction showing milk prices continuing to edge higher.

- NZPA