NZ dollar up on EU summit hope

The kiwi is expected to fall ahead of Thursday's EU leaders' summit. Photo / File
The kiwi is expected to fall ahead of Thursday's EU leaders' summit. Photo / File

The New Zealand dollar rose amid concerns the European Union summit on Thursday will fail to deliver a concrete solution to the regions debt crisis and as weaker-than-expected data boosted demand for high yielding currencies, such as the kiwi.

The New Zealand dollar traded at 79.20 US cents just before 8am up from 78.85 cents at 5pm yesterday. The trade weighted index increased to 71.87 from 71.64.

Markets are focused on the EU's two-day summit in Brussels on Thursday to see if any decisive steps will be taken towards solving the euro-zone's debt crisis. It will be the first summit since Greece's parliamentary elections on June 17 that saw victories for pro-bailout parties. French and Italy are urging Chancellor Angela Merkel to take conclusive steps to end the crisis, now in its third year.

"The local currencies, the kiwi and the Aussie, performed relatively well overnight, deferring any news out of Europe until we get past the meeting at the end of the week," said Stuart Ive, currency strategist at HiFX.

Figures showing American consumers have become less optimistic also helped lift the kiwi, he said.

In the US, consumer confidence fell to a five-month low as mounting concern over jobs and incomes dimmed the outlook for spending. The Conference Board's sentiment index fell to 62 from a revised 64.4 in May.

A separate report showed that home prices in the US were stabilising, with prices rising for a third straight month in April.

It's a data heavy week in the US, with durable goods orders released on Wednesday and gross domestic product and jobless claims out on Thursday.

New Zealand's second-largest export market, China has a slew of data out at the end of week, with the leading index and business sentiment and purchasing managers' index. The HSBC preliminary purchases manager index gave a reading of 48.1 in June, indicating that Chinese manufacturing could shrink for an eighth consecutive month, amid reports that Chinese coal demand has also been easing.

New Zealand's merchandise trade will be released by Statistics New Zealand later this morning.

The New Zealand dollar was little changed on 78.60 Australian cents from78.64 cents at 5pm. It was largely unchanged on 50.55 British pence from 50.60 pence. The kiwi increased to 63.31 euro cents from 63.05 cents and increased to 62.87 yen from 62.69 yen.

- BusinessDesk

© Copyright 2014, APN New Zealand Limited

Assembled by: (static) on red akl_a3 at 19 Sep 2014 11:09:50 Processing Time: 388ms