NZ dollar rises as Oz dollar gains

The New Zealand dollar nudged toward the US73c level today as the Australian dollar rose and equity markets firmed.

The NZ dollar was at US72.82c at 5pm from US72.59c at 8am and US72.18c at 5pm on Friday. The Australian dollar rose to a three month high and was US90.88c at 5pm from US89.99c on Friday.

Dealers said the NZ dollar had basically recovered to the levels of a week ago on short-covering and on the back of a strong performance by the Australian dollar.

It fell last week on comments about the weakness of the economy by Reserve Bank Governor Alan Bollard when he raised the official cash rate 25 basis points to 3 per cent on Thursday.

The short-covering came after activity in the Chinese manufacturing sector held up in July in data released on Sunday. The Chinese purchasing managers' index eased only slightly, from 52.1 to 51.2.

The ANZ Commodity Price Index recorded a second successive drop in July today, easing 0.8 per cent over the month. There is also interest in the latest Fonterra milk powder auction, the results of which are due tomorrow morning.

The big event of the week is local unemployment data on Thursday.

The market was very surprised by the sudden drop in the unemployment rate from 7.1 per cent to 6 per cent last month.

Rankin Treasury said the Australian dollar has powered through US90c and has risen US4.50c in the last two weeks.

Against the Australian dollar the NZ dollar has been close to A82c but now threatens support at A80c. It was A80.14c at 5pm from A80.07c at 8am from A80.17c on Friday at 5pm.

The NZ dollar was at 0.5570 euro at 5pm from 0.5518 on Friday. It at 62.99 yen from 63.35 yen on Friday.

The trade weighted index was 67.57 from 67.12 Friday.

- NZPA