NZ dollar gains as risk sentiment improves, greenback weakens

BMO Capital Markets' Stephen Gallo: "Decent expectations for global growth and global risk assets"

The New Zealand dollar rose to its highest levels in more than two months as improving risk sentiment and rallying stock markets stoked demand for growth-linked currencies.

The kiwi rose to 71.53 US cents as at 8am in Wellington, the highest since late October, from 70.97 cents late yesterday. The trade-weighted index climbed to 74.31 from 73.87.

The Chicago Board Options Exchange Volatility Index (VIX), known as Wall Street's fear gauge, is hovering near its lowest levels in more than a decade touching 8.93 overnight, while the Dow Jones Industrial Average rose above 25,000 for the first time, stocks in Europe rallied and the CRB Index of 19 commonly traded commodities equalled its highest level in almost 12 months. The greenback had briefly gained earlier after figures showed stronger-than-expected private-sector jobs growth.

"We have decent expectations for global growth and global risk assets and, when you have above-potential global growth, the (US) dollar tends to weaken because people don't need to hold safe-haven dollars," BMO Capital Markets currency strategist Stephen Gallo told Reuters.

US private employers added 250,000 jobs in December, according to the ADP Research Institute, beating estimates of 190,000 jobs and stoking speculation official employment figures due out on Friday in the US will also be robust. A Labour Department report, due on Friday, is expected to show that nonfarm payrolls rose by 190,000 jobs in December, according to separate polls by Bloomberg and Reuters.

The kiwi dollar rose to 52.82 British pence from 52.49 pence yesterday and gained to 59.28 euro cents from 59.05 cents. It advanced to 91.01 Australian cents from 90.59 Australian cents, rose to 80.69 yen from 79.94 yen and traded at 4.6427 yuan from 4.6177 yuan.

(BusinessDesk)


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16 Comments & Questions

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Funny how the deafening cries about Labour causing the falling NZD have been silenced as the NZD recently strengthened to .715 USD from the finger-wagging lows of .6806
I expect any and all future falls will be solely due to Labour, and any and all future rises will be due to US related issues no doubt.

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It is also "funny" how people can claim the "kiwi is rising" when truth is "the US$ is falling".
Try comparing our $ strength now with our $ strength a year ago???

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On this day 1 year ago we were at .7014, todays rate has strengthened
to .7171. So your point is???

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Nothing factored in for inflation? Uni taught economist. *sigh*

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Haha you certainly sound like an economist all the imaginative excuses you come up with. At least you only used one ? this time.

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I thought that Winston was taking all the credit for a lower $NZ.
Maybe you are imagining things; I heard no deafening cries.
In fact Winston seems to be M.I.A.

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Clearly you weren't paying much attention post election on the NBR forums. Even the slightest decline in the NZD was attributed to Labour.
The silence since has been quite predictable really, however never fear given the NZD's history of volatility it will resurface again when the squiggly lines on the chart change direction again.

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Funny how Labour have reverted to breaking how many of their policies that they conned people into voting for, which drove the dollar down during the election period?.....

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Exactly, but the Tim's of this world don't want to talk about that. I have to say though, his opening comment gave me the biggest laugh so far this year for economic illiteracy.

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Conned women you mean. In the 2 days after Andrew Little's stood down the polls went up to much higher levels for no reason except someone from the sisterhood turned up. Sad.

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My hubby's forex advisor was telling him to look for an NZD in the .76 range later in the year as interest rates start to hike

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Pretty bold prediction (both on the strong dollar and the interest rate hikes).

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Or the currency traders are expecting the new government to start running a deficit. If so lots of foreign currency will need to be converted into NZD to fund the deficit.

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I dought that Jacinda knows what a deficit is or its implication. Already the cupboard is bare with the opening gestures of irresponsible spending. More taxes, more government, more welfare when we should be going in the complete opposite direction.

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She probably knows how to spell the word "doubt", though. Which puts her a fairly big step ahead of you in the intellectual stakes.

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I'd like to see the NZD on par with the USD

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