Dollar rises to highest in more than six years against yen as investors bet on global recovery

The New Zealand dollar touched a fresh 6 ½-year high against the yen as investors bet on the prospects for a global economy recovery.

The kiwi touched 89.91 yen overnight, the highest level since November 2007, and was trading at 89.67 yen at 8am from 89.54 yen at 5pm yesterday. The local currency touched a two-and-a-half year high of 87.01 US cents overnight, and slipped to 86.47 US cents at 8am from 86.72 cents yesterday.

Overseas equities advanced overnight, pushing the Standard & Poor's 500 Index to a record high, as the latest US manufacturing data showed that the US economic recovery remained on track. Improved prospects for the world's largest economy buoyed investor sentiment about a global economic recovery and damped demand for safe haven investments such as the yen.

"Yen is a safe haven currency so when you have risk aversion it does well and when you have risk seeking it does badly," said Imre Speizer, senior market strategist at Westpac Banking Corp. in New Zealand. "Yen has underperformed as equity markets have gone up. It's not so much a Japanese fundamental story - it's a global recovery story, and the US particularly is recovering very, very slowly but going steadily in the right direction."

Speizer said the economic recovery trend was set to continue for the next couple of years.

In the US yesterday, the Institute for Supply Management's index increased to 53.7 in March from 53.2 a month earlier, a sign that the effects of the harsher-than-usual American winter are beginning to wear off. Of the 18 manufacturing industries, 14 reported growth in March, according to the report.

In New Zealand today, traders will be eyeing the March ANZ Commodity Price Index, scheduled for release at 1pm.

Prices dropped at this morning's Fonterra Cooperative Group GlobalDairyTrade auction as volumes increased. The GDT price index dropped 8.9 percent to US$4,124 a tonne from US$4,563 per tonne two weeks ago, the fourth straight decline and the lowest since August 2012. Some 39,653 tonnes of product was sold, up from 39,008 tonnes two weeks ago

The New Zealand dollar was little changed at 93.53 Australian cents from 93.61 cents yesterday after the Reserve Bank of Australia kept its benchmark interest rate at 2.5 percent as expected. Today, Australia has data on first quarter job vacancies and building approvals for February scheduled for release at 1:30pm New Zealand time.

The kiwi slipped to 62.69 euro cents from 62.95 cents yesterday as traders weigh up whether the European Central Bank will ease policy when it meets tomorrow. The New Zealand dollar was little changed at 52 British pence from 52.03 yesterday. The trade-weighted index weakened to 80.78 from 80.94 yesterday.

(BusinessDesk)