NZ dollar up as Glencore reassures market, commodity prices lift

The kiwi rose to 63.43 US cents at 8am in Wellington from 63.06 cents yesterday. The trade-weighted index advanced to 69.26 from 68.97 yesterday.

The New Zealand dollar gained after Swiss mining group Glencore hosed down concerns over its debt load, which boosted commodities and currencies sensitive to movements in raw material prices.

The kiwi rose to 63.43 US cents at 8am in Wellington from 63.06 cents yesterday. The trade-weighted index advanced to 69.26 from 68.97 yesterday.

The Thompson Reuters Core Commodity CRB Index, a measure of 19 commodity prices, rose 0.4 percent after mining company Glencore moved to dispel fears it might fail if commodity prices didn't recover, saying the business was "operationally and financially robust". That quelled some of yesterday's market volatility, and helped boost commodity-linked currencies such as the kiwi and Australian dollars.

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"Sentiment settled a little bit last night after Glencore said they don't have any liquidity problems, and that started the early bounce in European equities," said Sam Tuck, senior FX strategist at ANZ Bank New Zealand in Auckland. "There's still some nervousness out there, and that should see the kiwi well-capped, with sellers likely to come out at 64 (US cents)."

ANZ's Tuck said traders are repositioning their portfolios for the month- and quarter-end, which may support the kiwi and Australian dollars, which have both had very large short positions in recent months where investors sell the currency on the expectation they can buy it at a cheaper price.
US data remains the major event risk this week with Chicago purchasing managers' index and the ADP private payrolls report on Wednesday in the US, leading into non-farm payrolls on Friday.

Investors will be watching local building consents for August, and the ANZ Business Outlook survey for direction on New Zealand's economy.

The kiwi rose to 56.32 euro cents at 8am in Wellington from 56.02 cents yesterday after German and Spanish inflation came in below expectations. The European Central Bank is considering expanding its stimulus package to stoke inflation and economic activity in the euro-zone.

The local currency increased to 41.83 British pence from 41.58 pence yesterday, and rose to 75.84 yen from 75.43 yen. It was little changed at 90.75 Australian cents form 90.64 cents yesterday, and advanced to 4.0355 Chinese yuan from 4.0129 yuan.