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Kiwi climbs to three-week high as Aussie data stokes optimism


The kiwi hits a three-week high 77.14 US cents as better than expected jobs growth across the Tasman stoke investor appetite.

Paul McBeth
Thu, 07 Jun 2012

BUSINESSDESK: The New Zealand dollar rose to a three-week high 77.14 US cents as better than expected jobs growth across the Tasman stoked investor appetite for riskier, or higher-yielding, assets.

The kiwi rose to 77.05 US cents at 5pm from 76.98 cents at 8am and 76.22 cents yesterday. The trade weighted index gained to 70.07 from 69.40 yesterday.

Australia unexpectedly added 39,000 jobs last month, fuelling optimism about the so-called lucky country just one day after annual gross domestic product of 4.3% beat economists' forecasts.

Earlier this week the Reserve Bank of Australia cut the target cash rate a quarter point to 3.5%.

Traders have pared back their bets for rate cuts on both sides of the Tasman, pricing in a reduction of 90 basis points to Australia's cash rate over the next 12 months, and 21 points to New Zealand's benchmark rate over the same period, according to the Overnight Index Swap curve.

Expectations on future rate cuts have "changed big time in the last three days", said Joe Capurso, currency strategist at Commonwealth Bank of Australia in Sydney. The kiwi "could be up another US cent" if the current rally continues.

US Federal Reserve chairman Ben Bernanke will testify in front of legislators in Washington overnight, and markets will be looking for any hint of another round of quantitative easing.

Federal Open Market Committee member Janet Yellen told an audience in Boston yesterday that the US economy is still vulnerable to shocks and may need extra stimulus.

"If he hints about QE3, that should weaken the US dollar" and extend the trans-Tasman currencies' recent gains, Mr Capurso said.

The New Zealand dollar crept up to 77.43 Australian cents from 77.33 cents yesterday, and climbed to 61.16 yen from 60.11 yen.

It advanced to 61.33 euro cents from 60.93 cents yesterday, and rose to 49.81 pence from 49.40 pence.

Paul McBeth
Thu, 07 Jun 2012
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Kiwi climbs to three-week high as Aussie data stokes optimism
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