The New Zealand dollar is heading for a 0.9 percent weekly gain after the Reserve Bank kicked off a cycle of higher interest rates yesterday, though any upbeat investor sentiment may be short-lived as Russia faces more pressure over plans to annex Crimea.
The kiwi rose to 85.39 US cents at 5pm in Wellington from 84.55 cents at the New York close last week. It touched an 11-month high of 86.06 cents earlier today, and traded at 85.23 cents at 8am, down from 85.61 cents yesterday. The trade-weighted index fell to 79.87 from 80.04 yesterday, and is heading for a 0.6 percent weekly gain from 79.36 at last week's New York close.
A BusinessDesk survey of 11 traders and strategists on Monday predicted the kiwi would trade between 82.75 US cents and 86.35 cents this week. Five picked the currency to advance while four forecast a drop and two expected little change.
New Zealand's currency rose to a post-float high on a trade-weighted basis this week after the Reserve Bank hiked the official cash rate 25 basis points to 2.75 percent and signalled future rate hikes will go further than previously anticipated as governor Graeme Wheeler tries to tame inflation.
It has since come off that high as global investors grow wary of the stand-off between Russia and western nations over plans to annex Crimea from Ukraine. German Chancellor Angela Merkel is the latest to join the chorus of countries warning Russia over the current course of action.
"Rhetoric is ratcheting up a few notches over Ukraine with the western world not too happy about it all," said Michael Johnston, a senior dealer at HiFX in Auckland. "The TWI was at an all-time high yesterday and we're getting stretched."
HiFX's Johnston said the local currency is finding support at 85.15 US cents with resistance at 86 cents, and could head back to 84.50 cents next week.
Local data continued to support New Zealand's growing economic momentum with the BNZ-BusinessNZ performance of manufacturing index showing the sector expanded for an 18th straight month and was showing strong prospects for more employment.
The local currency rose to 94.63 Australian cents from 94.41 cents yesterday, and fell to 86.82 yen from 87.94 yen. It was little changed at 61.60 euro cents from 61.57 cents yesterday, and decreased to 51.37 British pence from 51.48 pence.
This article is tagged with the following keywords. Find out more about MyNBR Tags
- New Chief Executives appointed for Ministry for Pacific Peoples and Ministry for Women
- Youth big winners in Greens' final list
- Orion announces discounted rights issue, hints at possible takeover
- MediaWorks eyes better 2017 after two years of losses
- Summerset Group to sell $100m of six-year retail bonds
Most listened to
- Orion chief executive Ian McCrae on his company's full-year result and the year ahead
- Mainfreight chief executive Don Braid on the company's outlook and global reach
- The Green Party has revealed its final list and co-leader James Shaw is upbeat about the party's new look
- Steven Newman talks through Eroad's US progress
- Amy Adams says she has received a lot of good feedback about the Social Investment Agency
- NBR Radio: best of the week ended May 26, with Grant Walker