Dollar up on better data

Photo / Dean Purcell

The New Zealand dollar climbed further overnight after upbeat data around the world soothed worries about the health of the global economy, boosting investors' appetite for riskier assets.

The United States manufacturing sector grew more quickly than expected in August, China's factory activity regained momentum, and Australia's economy grew at its fastest pace in three years last quarter.

Also in the kiwi's favour, was a rise in dairy prices in Fonterra's overnight online trading event.

By 8am today the NZ dollar was buying US71.14c from US70.19c at 5pm. The kiwi also rose to 0.5557 euro from 0.5524, and was up to 60.05 yen from 59.20.

The kiwi rose broadly for much of the 24 hours to 8am, having dropped on the first two days of the week when it was dragged down by falling business confidence and the collapse on Tuesday of South Canterbury Finance.

The NZ dollar did manage to gain on the Australian dollar overnight lifting to A78.24c at 8am from A78.11c at 5pm, but not before dipping to a four-month low below A78c.

The Australian dollar rose broadly on news that the Australian economy expanded 1.2 per cent in the second quarter, beating forecasts of a 0.9 per cent rise.

BNZ markets strategist Mike Jones said yesterday's blockbuster Australian GDP figures set the aussie on a "path for glory" against the greenback, and the NZ dollar was more than happy to head up in its wake against the US currency.

The clear contrast between the recent economic performance of Australia and New Zealand weighed on the kiwi against the aussie.

A "stellar" result from the overnight Fonterra milk price auction added more juice to the NZ dollar rally, and in BNZ's view reduced the downside risk on Fonterra's forecast payout for 2010/11.

The trade weighted index was up to 66.21 at 8am from 65.66 at 5pm.

- NZPA