The New Zealand dollar gained almost 1 US cent overnight on optimism Greece will secure its second bailout package, making back the ground lost yesterday when Reserve Bank Governor Alan Bollard tried to talk down the currency.
The New Zealand dollar rose as high as 82.80 US cents from 81.85 yesterday at 5pm. It traded at 82.48 cents at 8am.
Investors holding at least 61 per cent of the total 206 billion euros of Greek have agreed to terms of a debt swap needed to ensure the second round of financial aid, Reuters reported.
That's above the 50 per cent required for a deal. The kiwi dropped yesterday after Governor Allan Bollard kept the official cash rate at a record low 2.5 per cent, saying a strong dollar is constraining imported inflation and weighing on economic growth.
"Bollard tried to talk the kiwi lower yesterday and it didn't work well - especially when the whole market is going euphoric about the Greek situation," said Tim Kelleher, head of institutional FX Sales NZ ASB Institutional.
Low interest rates are prevailing worldwide. The European Central Bank kept its benchmark interest rate unchanged at a record low 1 per cent. The Bank of England also left its debt-purchase program on hold and keep its benchmark interest rate at a record low. Both moves were unanimously predicted by economists.
In the US, the number of Americans filing claims for jobless benefits climbed to 362,000 last week. That's above the 352,000 claims estimated in a Bloomberg survey. Investors are eyeing Friday's jobs report which is expected to show that employers added 210,000 jobs to their payroll last month.
"It is the same old story for the week, if US data is improving the US dollar should improve - but if the data is strong the equity guys still seem to be buying," Kelleher said.
"It should be positive going into the data with the kiwi holding above 82 cents on the day," he said.
In New Zealand, electronic card transactions for February are set for release this morning.
The New Zealand dollar rose to 62.22 euro cents from 62.14 cents and increased to 52.16 British pence from 51.96 pence. It gained to 77.49 Australian cents from 77.22 cents. The kiwi advanced to 67.32 yen from 66.45 yen.
The trade-weighted index increased to 73.05 from 72.65.