Kiwi gains as investors await local data, Fed meeting

The New Zealand dollar extended its gain against the greenback from the tail-end of last week ahead of data which will likely augur well for the local economy and as the US Federal Reserve prepares to review monetary policy.

The kiwi rose to 80.80 US cents at 5pm in Wellington from 80.58 cents at 8am and 80.39 cents on Friday in New York. The trade-weighted index gained to 74.78 from 75.40 last week.

New Zealand's economy is forecast to have grown 0.6 percent in the first three months of the year, after expanding at the fastest clip in three years in the fourth quarter of 2012, according to a Reuters survey ahead of this Thursday's gross domestic product figures for the March quarter.

Local activity is being bolstered by the Canterbury rebuild gathering pace, ballooning house prices in Auckland and Christchurch, which have stoked consumer confidence, and the manufacturing and services sectors both expanded faster than expected last month.

Strong gross domestic product and balance of payments figures later this week "would certainly help the kiwi", said Chris Tennent-Brown, FX economist at Commonwealth Bank of Australia in Sydney. "The recovery in the kiwi might continue this week if the data comes in stronger than expected."

A BusinessDesk survey of 10 traders and strategists predicts the New Zealand dollar may trade between 78.50 US cents and 82.50 cents this week, with a positive bias.

Mr Tennent-Brown says the Federal Open Market Committee meeting will probably eclipse the local data, with investors looking for any hint on the US central bank's thinking on when to start unwinding its $US85 billion a month asset purchase programme.

"The expectations have come back quite a bit. We probably won't see a huge reaction unless there's a surprise to the market that sounds a lot more urgent."

The kiwi was little changed at 84.04 Australian cents from 84.06 cents on Friday in New York ahead of tomorrow's release of the minutes to the June 4 Reserve Bank of Australia monetary policy meeting for any clues on whether the central bank will cut interest rates further.

It rose to 76.51 yen from 75.69 yen last week,advanced to 60.65 euro cents from 60.29 cents and gained to 51.47 British pence from 51.24 pence on Friday in New York.

(BusinessDesk)