27 May 2009

Source: stuff.co.nz

The New Zealand dollar hit a new seven-month high around US62.60c after data showed improvement in US consumer confidence.

The kiwi briefly dropped under US61c around 10.45pm yesterday but then shot up to its peak just after 8am, having been at US61.79c at 5pm yesterday.

BNZ Capital currency strategist Danica Hampton said early on the market was all about risk aversion and safe haven demand for the US dollar.

"Worries about the North Korean nuclear situation, concern about escalating German debt and lacklustre Eurozone data put growth sensitive currencies like NZD under selling pressure," she said.

But investors then shrugged off weak US housing data and focused on a "stellar" US consumer confidence report.

"Hopes the US economy is on the road to recovery, combined with analyst upgrades on Apple, triggered a strong surge in US equities," Ms Hampton said.

"Strong gains on Wall Street and recovering risk appetite saw investors bail out of their safe haven USD positions."

The greenback erased all its earlier strength and the NZ dollar quickly rebounded.

The kiwi also strengthened against the European and Japanese currencies, rising to 0.4467 euro at 8am from 0.4419 at 5pm yesterday, and was up to 59.33 yen from 58.50.

Against the Australian dollar, the kiwi was little changed at A79.41c at today's local open, while the trade weighted index rose to 59.33 at 8am from 58.80 at 5pm.