Kiwi above 76 US cents as Greek pro-bailout party leads polls
BUSINESSDESK: The New Zealand dollar rose above 76 US cents in local trading for the first time in a week after early Greek opinion polls showed the pro-bailout New Democracy party had the most support ahead of next month's general election.
Financial markets are likely to judge this as allaying fears about a potential exit from the eurozone.
The kiwi climbed to 76.08 US cents at 5pm from 75.72 cents at 8am and 75.29 cents at the close of trading in New York on Friday.
The trade weighted index gained to 69.29 from 68.89 last week.
Greece's New Democracy, which supports the rescue plan negotiated with global leaders, placed first in all six opinion polls published on May 26 in the lead-up to the June 17 election.
The Mediterranean nation's legislators threw the region into disarray when they failed to form a viable government at last month's election, raising fears it may have to leave the eurozone and ditch the single currency.
"It's a long way to go to 17 June and the polls are going to swing," said Imre Speizer, market strategist at Westpac Banking. The kiwi's gain is "certainly alleviating that oversold condition, and we might see it bounce up to the 77, 78 US cents area this week".
With US markets closed for the Memorial Day holiday today, investors will be watching headlines in Europe, with speculation Spain may seek European Central Bank support to bail out the nationalised lender, Bankia SA.
The country's fourth-biggest bank needs 19 billion euros of state funding. The yield on Spain's benchmark 10-year bond rose three basis points to 6.35%.
Three of five strategists surveyed by BusinessDesk expect the kiwi will gain this week as Europe's sovereign debt woes calm down for the time being.
US employment figures and Chinese manufacturing data will be the focus for traders when they are published on Friday.
The New Zealand dollar rose to 60.49 euro cents from 60.14 cents at the close of trading in New York on Friday and increased to 48.50 British pence from 48.07 pence.
The kiwi climbed to 77.25 Australian cents from 77.15 cents last week and gained to 60.97 yen from 59.97 yen.
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Comments and questions2
What a false hope. Although the will to agree to the bail-out deal may appear to be there at times, the actual performance of the bail-out deal by the Greek government side, and the resulting financial viability of the Greek state under this deal or anything close to it is far from assured.
More likely: the deal will never be substantially honoured, relations will sour leading to a (further) Greek government default and possible repudiation of the debt, while the Greek people and economy continue to use the Euro (which is better for them than any locally issued alternative).
I still can't see why many people think currency chaos is a good thing or a necessary thing to add to a sovereign default situation such as this.
For an export-led recovery, you'd want the value of the Kiwi to be lower...