NZ dollar gains amid stronger global data
by Paul McBeth
Dec. 2 (BusinessDesk) – The New Zealand rose as upbeat data around the world and an increase in milk powder prices in
global dairy products exporter Fonterra’s online auction stoked investors’ appetite for riskier, higher-yielding assets.
Investors were optimistic in the first day of December trading for the northern hemisphere after manufacturing data in
the U.K. and China beat expectations, as did American private employment payrolls and German consumer spending.
Meanwhile, investors’ fears about the state of Europe’s sovereign debt eased ahead of today’s European Central Bank
meeting, which is expected to shore up confidence that policy-makers won’t let the debt crisis spread.
Milk prices rose 1.6% to US$3,594 a tonne on Fonterra’s globalDairyTrade platform, with most gains in the longer
contracts.
“The ECB is coming up tomorrow and markets are anticipating it will actually take more concrete steps to help out the
sovereign debt crisis, so risk assets are performing,” said Khoon Goh, head of market economics and strategy at ANZ New
Zealand.
“Commodity prices rose and were very very strong overnight. I thought the kiwi would have done better and the fact that
we haven’t suggests we might lag behind any further gains.”
The kiwi climbed to 74.90 U.S. cents from 74.48 cents yesterday, and rose to 68.28 on the trade-weighted index of major
trading partners’ currencies from 68.05. It advanced to 63.04 yen from 62.14 yen yesterday, and fell to 77.42 Australian
cents from 77.58 cents.
It was little changed at 57.08 euro cents from 57.14 cents yesterday, and increased to 48.02 pence from 47.81 pence. Goh
said the currency may trade between 74.55 U.S. cents and 75.45 cents today, and will take its lead from the Australian
dollar.
The Federal Reserve’s summary on current economic conditions, commonly known as the Beige Book, showed the world’s
biggest economy is still improving, and manufacturing activity is expanding in most districts.
The U.S. housing market is still depressed, while lending activity remained stable.
Though fears about Europe’s sovereign debt eased in the Northern Hemisphere sessions, investors are still nervous about
the region, with a German sale of five-year debt struggling to attract demand, while Belgian 10-year bond yields rising
to the highest spread above German bunds since 1993.
(BusinessDesk) 09:09:58