NZ dollar pushes higher as US equities rise

The New Zealand dollar pushed higher in the 45 minutes before 8am today, in line with late day improvements in United States equities.

The kiwi moved from around US66.25c at 7.15am to US66.78c at 8am, up from US66.34c at 5pm yesterday.

BNZ strategist Mike Jones said easing risk aversion had seen sentiment towards the NZ dollar stabilise overnight, having spent most of the 24 hours to 8am consolidating in a range between US65.80c and US66.80c.

Most major currencies had simply chopped around inside their recent ranges, Jones said.

The lack of any further "bad" news out of Europe, and some encouraging comments from US

Federal Reserve Chairman Ben Bernanke - who said the US economy seemed to have enough momentum to avoid a "double-dip" recession - helped assuage market fears about the strength of the global recovery.

With risk appetite stabilising, and Asian equity markets posting gains of 0.2 to 1.2 per cent, sentiment towards growth-sensitive currencies such as the NZ dollar improved.

In light of mounting concerns about Europe's debt crisis, fundamentals had largely gone out the window, with equity market sentiment becoming the major driver of the currency, said Jones.

The correlation between the Standard & Poor's 500 Index and the NZ dollar against the greenback had risen from around 40 per cent in mid-April to closer to 85 per cent now.

The S&P rose strongly in the last hour of trade in the US, ending up 1.1 per cent.

The euro rose against the US dollar as investors booked profits a day after the European currency hit its lowest level against the greenback since early 2006.

The euro also hit an all-time trough below 1.38 Swiss francs but rebounded sharply, with traders citing Swiss National Bank intervention to weaken the franc.

The NZ dollar was up to 0.5590 euro at 8am from 0.5546 at 5pm, and also lifted to 61.02 yen from 60.80.

Against the Australian dollar, the kiwi fell to A80.75c at the local open from A81.05c at 5pm, while the trade weighted index was up to 65.71 at 8am from 65.39 at 5pm.

- NZPA