The New Zealand dollar rose along with a firm Australian dollar today as investors became more comfortable with risk as equity markets rallied.Attention is also turning to next week's Reserve Bank monetary policy statement."We think that the RBNZ is
The New Zealand dollar rose along with a firm Australian dollar today as investors became more comfortable with risk as equity markets rallied.
Attention is also turning to next week's Reserve Bank monetary policy statement.
"We think that the RBNZ is very likely to raise the official cash rate to 2.75% at next week's review," Deutsche Bank said. The market is pricing in an 80% chance of a 25 basis point rate hike.
The NZ dollar was 68.46USc at 5pm from 67.42USc at 5pm yesterday. It eased against a resurgent Australian dollar to 80.82Ac from 81.24Ac.
The NZ dollar rose to a two-week high against the yen after yesterday's resignation of Japanese Prime Minister Yukio Hatoyama raised concerns about the outlook for that currency, given that his likely successor has said in the past he wanted a weaker yen.
By 5pm the NZ dollar was at ¥63.15 from ¥62.83 at 8am and ¥61.55 at 5pm yesterday. It rose to €0.5569 from €0.5521 euro yesterday.
BNZ strategist Mike Jones expected the NZ dollar to remain well supported in coming months, with one of the reasons being "lofty" commodity prices as indicated by yesterday's ANZ index, which showed commodity export prices up a further 2.5% in May.
Overall, world prices for New Zealand export commodities are 54.5% above year-ago levels and, even with a stronger kiwi currency, NZ dollar prices are up 30% over the corresponding period.
Along with the impetus from rising commodity prices, a cautious improvement in rise appetite supported the NZ dollar after the US equity market was buoyant on Wednesday night.
The trade weighted index rose to 66.51 at 5pm from 65.83 at 5pm yesterday.
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