The New Zealand dollar jumped to a three-week high as investors were lured to the nation's higher growth and better yields.
The kiwi touched 86.82 US cents this morning, its highest level since April 15. The local currency was trading at 86.71 cents at 8am in Wellington, from 86.66 cents at the New York close and 86.27 cents at 5pm on Friday in Wellington. The trade-weighted index rose to 80.53 from 80.20 on Friday.
Investors favoured the local currency as the New Zealand economy outperforms its peers, as the first major central bank to hike rates following the global financial crisis. Investors pared back their exposure to the US dollar after data on Friday showed the US labour market isn't as strong as initially suggested. Even though US employers added 288,000 workers in April, the labour participation rate fell as more Americans stopped job hunting and wage growth remained flat.
"There are some contradictory indicators as to the strength of the headline number," said Sam Tuck, senior foreign exchange strategist at ANZ Bank New Zealand. "It's not bad, it's just not good enough. Kiwi remains in demand because it has both growth and yield in an environment of reasonably benign global economic growth. At the moment we are still the standout."
ANZ expects the kiwi to trade between 86 US cents and 87.30 cents today.
Later today, traders will be eyeing reports on Australian monthly building approvals and job advertisements.
The New Zealand dollar gained to 93.22 Australian cents from 92.96 cents on Friday, increased to 62.43 euro cents from 62.23 cents, rose to 51.36 British pence from 51.08 pence and advanced to 88.60 yen from 88.31 yen.
Japanese banks are closed today in observance of Children's Day.
This article is tagged with the following keywords. Find out more about MyNBR Tags
Most listened to
- NBR Radio Rich List Special: Interviews with Rich Listers, philanthropists, property gurus, investors and much, much more
- “An RBA interest rate cut is pretty much a done deal,” says Capital Economic's Paul Dales
- Japan’s Prime Minister Shinzō Abe opens the floodgates to more stimulus. Join NBR's Jason Walls as he explains why
- Despite a few howls of protest, land economics expert Adam Thompson rates the Auckland Unitary Plan
- Hamish McNicol discusses the Serious Fraud Office’s warning to companies about employee fraud