The New Zealand dollar rose to a week-high against the pound after Britain's economy unexpectedly shrank in the fourth quarter of last year.

New Zealand consumer prices rose 2.3 per cent as expected in the three months ended December 30, mainly reflecting the hike in GST.

Equities in Europe and on Wall Street rallied after Portugal's successful bond sale eased concerns about the euro-zone's debt crisis.

The economy rebounded in the December 2010 quarter, after contracting in September, according to the latest Quarterly Survey of Business Opinion.

The New Zealand dollar faces pressure in its first full week of trading in 2011 as support for the greenback is bolstered by upbeat US data and renewed fears about European debt.

I worry that the banks are trying to unleash those animal spirits in the housing markets again.

The Reserve Bank has left the Official Cash Rate on hold at 3 per cent. In his Monetary Policy Statement, Governor Alan Bollard said the pace of economic growth 'appears to have moderated'.

The financial market now expects the Reserve Bank will not increase the OCR from 3 to 3.25 per cent until June next year.

Ireland's travails may be short-lived, but the eurozone's future is not looking good.