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NZ dollar gains as investors look to book profits from surging greenback

The US dollar has been on a tear this quarter as the Federal Reserve delivered on an expected interest rate hike in December

Paul McBeth
Fri, 30 Dec 2016

The New Zealand dollar gained as investors looked to take advantage of an 8.2% gain in the greenback over the past quarter, booking profits and squaring up their books heading into 2017. 

The kiwi rose to 69.44USc as at 8am in Wellington from 69.28USc yesterday. The trade-weighted index edged up to 77.56 from 77.41 yesterday. 

The greenback has been on a tear this quarter as the US Federal Reserve delivered on an expected interest rate hike in December, and signalled a more aggressive tightening cycle in the new year after Republican candidate Donald Trump beat Hillary Clinton, on a campaign of tax reform and infrastructure spending.

That's seen yields on 10-year US Treasury bonds soar to 2.48% from 1.78% before the election, boosting the attraction of global bonds and also the greenback. 

"In thin financial markets at the end of the financial year and end of quarter, there's going to be some profit taking, but it will be very short-lived," says Paul Webber, senior dealer foreign exchange at OMF in Auckland.

"We could see the kiwi push into the high 69s, but I'd be surprised it we saw 70USc." 

The kiwi rose to 96.45Ac from 96.16Ac yesterday. Mr Webber says that cross-rate is trading near the top of its recent ranges, and expected that trend to remain intact until either New Zealand or Australia shifted interest rates. 

The local currency rose to 4.8278 Chinese yuan from 4.8180 yuan yesterday and was little changed at ¥80.93 from ¥80.87. It increased to 56.75 UK pence from 56.55p yesterday, and dipped to 66.21 euro cents from 66.33c yesterday. 

(BusinessDesk)

 

Paul McBeth
Fri, 30 Dec 2016
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NZ dollar gains as investors look to book profits from surging greenback
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