Dollar gains as investors start new quarter on upbeat note

The New Zealand dollar gained as investors began the new quarter on a positive note.

The kiwi rose to 63.90USc at 8am in Wellington from 63.65c yesterday. The trade-weighted index advanced to 69.70 from 69.42.

Stocks on Wall Street grained, with the Dow Jones Industrial Average up 1.1% in afternoon trading, bouncing from what's set to be the worst quarter in four years.

That upbeat sentiment underpinned support for risk-sensitive currencies such as the kiwi and Australian dollars, which have been sold off in recent months as investors grew wary about the impact a slowing Chinese economy would have on New Zealand and Australian exports, and the prospect of rising US interest rates.

"It's a bit of a retracement of the quarter moves in equities, and more just quarter-end flows, rather than anything that saw equities come off their lows," says Raiko Shareef, currency strategist at Bank of New Zealand in Wellington. "That translated into a pretty risk-positive tone for currencies and helped the kiwi come back up near 64USc."

Investors will be watching a series of manufacturing surveys in China, Europe and the US today as they continue to gauge the strength of emerging market economies and the pace of the US recovery.

US non-farm payrolls on Friday will be closely watched after the ADP private payrolls report showed more jobs growth in the world's biggest economy last month.

Locally, traders will keep an eye on property value data for September, with Auckland's property market still a concern for the Reserve Bank. New legislation to more stringently police capital gains tax on the sale of investment properties also comes into effect today.

The kiwi gained to 57.20 euro c form 56.58c after negative inflation in the Eurozone in September, the first contraction in six months. The local currency increased to 42.23 British pence from 42.02 pence yesterday, and rose to 91.08Ac from 90.85c. It gained to 76.66 yen from 76.34 yen yesterday, and rose to 4.0612 Chinese yuan from 4.0489 yuan.

(BusinessDesk)