Weak US outlook sees kiwi gain on greenback

The New Zealand dollar rose as the prospect of continuing weak US economy eroded demand for the greenback. Photo / Thinkstock

The New Zealand dollar rose as the prospect of continuing weak US economy eroded demand for the greenback.

The kiwi recently traded at 83.77 US cents, up from 83.58 cents yesterday, although the currency fell to 71.64 on the trade-weighted index of major trading partners' currencies from 71.71 previously.

The Dollar Index, a measure of the greenback against a basket of six major
currencies, dropped to 73.68 from 73.98 yesterday, its lowest level since July 29.

That came amid further signs that investor confidence was recovering, with Wall Street's fear gauge the VIX, or the Chicago Board Options Exchange volatility index, falling to 31.96, its lowest level since before Standard & Poor's stripped the U.S. of its triple-A credit rating.

"Investors seem to be taking a bit of breather and seeing how things play out after a volatile couple of weeks," said Sam Coxhead, a currency adviser at directfx.co.nz.

"We have seen some U.S. dollar safe-haven buying in the last couple weeks and now we're seeing people start to exit some of those positions."

Currency markets experienced a high level of volatility after the Swiss National Bank said it would boost liquidity in the Swiss franc in a bid to depreciate the currency which has risen to historic levels due to its perceived safe-haven status.

The move did little to dent the currency, with the franc last trading at 78.87 US cents, up from 78.33 cents immediately after the announcement.

On the crosses, the New Zealand dollar recently traded at 79.93 Australian cents, up from 79.64 cents yesterday, and rose to 64.11 Japanese yen from 64.01 yen previously. It was little changed at 58.02 euro cents from 58.08 cents yesterday, and fell to 50.59 pence from 50.85 pence.

The kiwi may trade between a range of 83.20 US cents and 84.25 cents, Coxhead said, with the currency likely to trade sideways during the course of the day.

- BusinessDesk