Kiwi ekes out gains on upbeat Australian consumers

BUSINESSDESK: The New Zealand dollar followed its trans-Tasman counterpart higher when an upbeat Australian consumer confidence report snapped pessimism after US stocks and commodity prices weakened.

The kiwi rose to 79.45 US cents at 5pm from 79.30 cents at 8am and 79.27 cents yesterday. The trade-weighted index edged up to 72.27 from 72.18 yesterday.

Australian consumer sentiment rose to a six-month high, while still showing the number of pessimists outnumber optimists, in a Westpac Banking and Melbourne Institute survey.

That bolstered demand for the trans-Tasman currencies, which had been sapped by falling prices for raw materials in Northern Hemisphere trading after China reported slower import growth.

"There was a little bit of a pick-up today given the magnitude of the fall last night, but the trend in the kiwi has been down since the first of July," said Imre Speizer, market strategist at Westpac Banking in Auckland.

"This turn has got a lot more life in it, and could be the one to take us into the low 70s."

Traders are waiting for the release of the minutes for last month's Federal Open Market Committee later tomorrow in Washington, and will be looking for any hint the Federal Reserve will extend its asset purchase programme to stoke growth in the world's biggest economy.

Mr Speizer said if the details don't stray too far from the short statement, markets won't really react.

The next major event for markets will be the release of China's second-quarter gross domestic product figures, which will likely show the world's second-biggest economy is slowing down. The kiwi rose to 5.0602 renminbi from 5.0509 yesterday.

Global sentiment was also dented in Northern Hemisphere trading when Italy’s Prime Minister Mario Monti said he can’t rule out having to tap the region’s bailout fund in the future. He won’t seek another term in office when the current one expires next year.

The kiwi dollar rose to 46.80 euro cents from 64.54 cents yesterday and edged up to 51.19 pence from 51.13. It fell to 77.86 Australian cents from 78.10 and was little changed at 62.99 yen, down from 63.04.