NZ dollar hits 81.19 US cents

Photo / File
Photo / File

The New Zealand dollar held near a three-month high amid speculation policymakers from the European Central Bank and the Federal Reserve will announce additional policy measures to shore up the global economy.

The New Zealand dollar rose as high as 81.19 US cents overnight. It traded at 80.98 cents just before 8am little changed from 80.99 cents yesterday at 5pm. The trade weighted index was largely unchanged at 72.85 from 72.93.

The Fed's two-day meeting began yesterday in Washington DC, and follows government figures showing US consumer spending stagnated in June. That's supporting bets chairman Ben Bernanke will be forced to add more stimulus to the world's largest economy. European policymakers will meet today in Frankfurt. Last week, ECB President Mario Draghi pledged to do whatever it takes to preserve the single currency, suggesting the bank may intervene in bond markets to support ailing euro-area economies.

"The only show in town this week is the ECB and FOMC," said Alex Sinton, senior dealer at ANZ New Zealand. "It's not the job of central banks to bail out fiscally irresponsible governments, but that appears to be what markets are hoping for."

Central Banks on both sides of the Atlantic will release the statements from their monetary policy meetings on Thursday.

"Having spent a couple of days within tight ranges the New Zealand dollar is destined to follow the same trail today," Sinton said. "The real event begins tomorrow with the FOMC announcement."

China, New Zealand second-biggest export market, will release its official performance manufacturing index this afternoon. Last week, trans-Tasman currencies got a lift after the HSBC purchasing managers' index showed a gentler pace of contraction in Chinese manufacturing than expected, stoking optimism the world's second-biggest economy won't face as harsh a slow-down as feared.

Australia, New Zealand's biggest export market, will also release its PMI along with housing data this afternoon. The kiwi was little changed at 76.99 Australian cents from 76.92 cents yesterday at 5pm.

The New Zealand dollar edged up to 51.60 British pence from 51.52 pence yesterday after Moody's Investors Service cut its forecast for UK economic growth and said the government will struggle to meet its debt-reduction targets.

There is no significant New Zealand data set for release today.

The New Zealand dollar fell to 65.75 euro cents at 8am from 65.96 cents yesterday. The kiwi fell to 63.11 yen from 63.35 yen.

- BusinessDesk

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