NZ dollar gains as commodities, equities rise

Photo / Dean Purcell

The New Zealand dollar rose against the greenback, although it remained within recent trading ranges, as commodity and equity markets regained some of the ground they lost after last week's correction.

On Wall Street, the Standard & Poor's 500 Index recently traded 1 per cent higher at 1359.05, setting the benchmark up for its third day of gains, with investor risk appetite bolstered by higher-than-expected earnings forecasts from Dean Foods Co, and Microsoft Corp's acquisition of Skype Technologies SA.

Sentiment was also bolstered by Chinese trade data for April, which showed the world's second-largest economy widened its trade surplus to US$11.4 billion in the month from $11.2 billion previously.

In the year ending April, exports rose 29.9 per cent compared to the previous period. That was a sign the market took to read that global demand is strong, with the Thompson Reuters Jefferies CRB Index, a measure of 19 commodities, gaining 1.3 per cent to 348.57.

"Risk appetites got a shot in the arm from equities and commodities," said Imre Speizer, market strategist at Westpac Banking Corp.

"I wouldn't be surprised to see an upwards drift in the currency today, but no higher than 80 US cents."

The kiwi recently traded at 79.55 US cents, up from 79.23 cents yesterday, and rose to 68.30 on the trade-weighted index of major trading partners' currencies from 68.20 yesterday.

It fell to 73.33 Australian cents from 73.48 cents previously, and gained to 64.21 yen from 64.04 yen.

It rose to 55.22 euro cents from 55.17 cents yesterday, and rose to 48.63 pence from 48.39 pence.

After the strong trade numbers from China yesterday, traders will be waiting for the release of Chinese CPI data for April today for a read on when the Peoples' Bank of China is likely to hike rates.

The central bank had previously indicated with would continue to tighten monetary policy unless it saw an improvement in inflation and a slowdown in exports.

Traders are awaiting the release of the Reserve Bank's financial stability report today, which may give Governor Alan Bollard a platform to comment on current monetary conditions.

The release of the Australian Federal budget had little impact on currency markets late yesterday, when Treasurer Wayne Swan maintained the country's forecast return to budget surplus in 2012-13, via a mixture of tax increases and spending cuts.

The kiwi dollar may trade between a range of 78.90 US cents and 80 cents, Speizer said, with solid support on the bottom of the range.