NZ dollar rises as stock markets keep gains in face of weak US data
By Jason Krupp
Aug. 31 (BusinessDesk) - The New Zealand dollar rose against the greenback as global equities managed to hold onto their
gains despite a string of weaker U.S. economic data, suggesting investors' appetite for higher-yielding, or riskier,
assets is starting to show some resiliency.
The New Zealand dollar recently traded at 85.49 U.S. cents, up from 85.02 cents yesterday, and rose to 72.96 on the
trade-weighted index of major trading partners' currencies from 72.58 previously.
Global stock markets extended recent gains amid volatile trading as investors continued to search for oversold assets,
with the Standard & Poor's 500 Index gaining 0.7% to 12189.50, and Europe's Stoxx closing 1% higher at 230.60. The robust appetite for risk
saw increased demand for growth-linked currencies such as the kiwi and Australian dollars.
"We're broadly tracking equity markets, with equity markets being a broad reflection of the risk environment, though the
kiwi has outperformed" said Mike Hollows, director of trading at HiFX in Auckland. "The global environment remains quite
flat and anything that shows modest growth will stand out. We're seeing some hot money move into the Australasia
Still, sentiment was tempered after a weaker run of U.S. consumer confidence and housing data. Gold reversed declines,
with the previous metal recently trading at US$1,835.50 an ounce, up from US$1,795.69 yesterday, and yields on U.S.
10-year Treasury Bills fell to 2.18% from 2.22%
On the crosses, the kiwi recently traded at 79.78 Australian cents, down from 79.81 cents yesterday, and rose to 65.53
Japanese yen from 65.18 yen previously. It gained to 59.14 euro cents from 58.68 cents yesterday, and climbed to 52.43
pence from 51.88 pence previously.
Fresh fears on the pace of growth in euro zone economy reemerged after a key indicator of sentiment deteriorated by more
than expect in August. The European Commission’s monthly survey showed economic sentiment in the euro zone’s 17 member
countries fell to 98.3 in the month from a revised 103 in July, according to Reuters.
Hollows said the kiwi may trade between 85 U.S. cents and 85.60 cents, with the bias tipped to the downside.