NZ dollar gains as Asian stocks follow Wall Street higher
The New Zealand dollar gained in the local trading session as an improving outlook for US economic growth sparked a rally on Wall Street that fed into Asian stock markets.
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BUSINESSDESK: The New Zealand dollar gained in the local trading session as an improving outlook for US economic growth sparked a rally on Wall Street that fed into Asian stock markets.
The kiwi rose to 82.09 US cents at 5pm from 81.84 cents at 8am, and was down from 82.30 cents yesterday. The trade-weighted index was little changed at 73.33 from 73.27.
The positive tone on US growth in the Federal Open Market Committee on Tuesday encouraged stocks on Wall Street to rally, with the Dow Jones Industrial Average hitting a five-year high 13,177.68, and Asian share markets have followed with Japan’s Nikkei 200 up 1.8 percent to 10,076.31 and Hong Kong’s Hang Seng up 1.3 percent to 21,612.22 in afternoon trading.
“Equity markets are looking seriously long at these levels as they shoot through multi-year highs,” said Alex Hill, senior currency strategist at HiFX in Auckland. The kiwi “looks like it’s settling in a range in the 81 to 82.50 US cents area.”
The Chicago Board Options Exchange’s Volatility Index, commonly known as Wall Street’s fear gauge, fell 8.4 percent to 14.8, having touched a five-year intraday low during the US trading session.
The lack of volatility in the market may prompt investors to cash in their gains, and a sell-off in equities could lead to a sharp decline in commodity-linked currencies such as the Australian and New Zealand dollars, Hill said.
“If you do see a sell-off, that should flow through to commodity currencies” and the kiwi dollar would probably attract buyers around 79.50/80 US cents, he said.
The kiwi rose to 62.74 euro cents from 62.41 cents yesterday and fell to 52.34 pence from 52.54 pence. It fell to 77.79 Australian cents from 77.97 cents yesterday, and climbed to 68.22 yen from 67.67 yen.
Paul McBeth
Wed, 14 Mar 2012
Wed, 14 Mar 2012
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NZ dollar gains as Asian stocks follow Wall Street higher
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