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NZ dollar climbs above 83 U.S. cents as equities rebound

Published: Fri 12 Aug 2011 08:29 AM
NZ dollar climbs above 83 U.S. cents as equities rebound
By Jason Krupp
Aug. 12 (BusinessDesk) - The New Zealand dollar rose back above 83 U.S. cents this morning, as global equity markets rebounded strongly for the second time this week after U.S. unemployment claims unexpectedly dropped.
The New Zealand dollar recently traded at 83.10 U.S. cents, up from 81.95 cents yesterday, and rose to 71.88 on the trade-weighted index of major trading partners’ currencies from 70.93 previously.
U.S claims for state unemployment benefits fell last week to the lowest level since April, according to the latest Labour Department data, falling 7,000 to a seasonally adjusted 395,000. That was below the 400,000 expected by economists, and provided just enough good news to trigger a turnaround on already heavily oversold equity markets.
On Wall Street, the Standard & Poor's 500 Index rose 4.6% to 1,172.64, while Europe's Stoxx 600 gained 3.2% to 230.57. The 19-commodity Thompson Reuters CRB Index rose 1.8% to 326.34.
The reversal in risk appetites saw demand for growth-linked currencies rise with the both the kiwi and the Australian dollar pulling back from the bottom end of their recent trading ranges. That came at the expense of so-called safe haven assets, with gold falling US$1745.99 an ounce, down from US$1783.76 yesterday.
"What happen the last 24 hours has been relatively stable compared to where it's been in the last five or six days," said Andrew Isbister, managing director of DirectFX.co.nz. "People who missed buying the kiwi when it dipped below 80 cents are now getting in and that's starting to build a base around 81 U.S. cents."
On the crosses, the New Zealand dollar recently traded at 80.35 Australian cents, down from 79.74 cents yesterday, and rose to 63.85 Japanese yen from 62.53 yen previously. It climbed to 58.36euro cents from 57.49 cents previously, and gained to 51.22 pence from 50.67 pence yesterday.
Investors ignored weaker jobs numbers out of Australia yesterday, with official data showing the unemployment rate jumped to 5.1% in July, up from 4.9% in the previous month. The Australian dollar recently traded at US$103.49, up from US$102.69 yesterday.
The kiwi may trade between a range of 81 U.S. cents and 83.25 cents, Isbister said, with volatile trading likely due to limited liquidity in the currency.
(BusinessDesk)

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