The New Zealand dollar rose to its highest level in nearly a week against the United States currency which was broadly weaker, partly on concern a tax deal could swell the large US budget deficit.At 8am today the kiwi was around session highs at US75.69c,
The New Zealand dollar rose to its highest level in nearly a week against the United States currency which was broadly weaker, partly on concern a tax deal could swell the large US budget deficit.
At 8am today the kiwi was around session highs at US75.69c, having climbed through the night from US74.82c at 5pm.
Michael Woolfolk, currency strategist at BNY Mellon, said markets were confident that a deal cut last week by the White House and Republicans to extend Bush-era tax cuts would boost growth, and that helped lift the greenback last week.
But the markets also feared that with unemployment near 10 percent, the US central bank would press on with a $US600 billion ($NZ792.7b) bond-buying program to keep long-term rates low, he said.
That, together with the tax cuts, could swell a budget deficit already in excess of $US1 trillion.
BNZ currency strategist Mike Jones said financial market sentiment had brightened noticeably overnight.
The fact that China appeared to be holding off on interest rate hikes, in favour of increases in bank reserve requirements, saw investors heave a collective sigh of relief, Mr Jones said.
The improving risk appetite and commodity price gains had bolstered demand for growth-sensitive currencies such as the NZ and Australian dollars.
The NZ dollar remained in a tight range against the aussie overnight between about A76.10c and A75.70c as it bumped along near seven-week lows.
The kiwi slipped to 0.5642 euro at 8am from 0.5670 at 5pm, and edged up to 63.01 yen from 62.89. The trade weighted index lifted to 67.90 at 8am from 67.79.
ANZ said it expected the NZ dollar to tentatively test topside trends today, but technical theorists thought resistance around US75.80c should remain out of reach with the release of Treasury's Half Year Economic and Fiscal Update at 1pm.
Yesterday Prime Minister John Key said today's data would show economic growth and the Government's fiscal performance in the current year to be a bit below what was forecast in the budget.
