NZ dollar up after oil price gains boost currencies

Photo / NZ Herald

The New Zealand dollar advanced as commodity currencies were bolstered by an increase in oil prices and as the US dollar continued to weaken.

The kiwi traded at 67.93 US cents at 8am in Wellington from 67.92 cents at the New York close, and up from 67.73 cents on Friday. The trade-weighted index increased to 71.90 from 71.77 on Friday.

The currencies of commodity producing countries, such as the kiwi and the Aussie, gained as investor optimism was bolstered by a 6.6 percent increase in oil prices amid speculation that the Organization of the Petroleum Exporting Countries and other major oil producers may agree to freeze production when they meet in Doha, Qatar on April 17.

However, while some countries have tentatively agreed to freeze production, that may be contingent on a similar commitment from Iran which isn't expected to agree.

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"Underpinning the outperformance of the 'oil-linked' currencies was a 6.6 percent jump in the WTI oil price, ahead of the coming weekend's Doha meeting of OPEC and non-OPEC producers," Bank of New Zealand senior market strategist Kymberly Martin said in a note. "However, there is no tangible evidence that a production freeze will be agreed."

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A weaker US dollar was also bolstering other currencies against it, Martin said, noting traders were pricing in less than a 50 percent chance that the Federal Reserve will hike interest rates by the end of the year.

In a speech on Friday night, New York Fed president William Dudley reiterated comments from Fed chair Janet Yellen that there was "significant uncertainty" about growth prospects abroad, requiring the need for a cautious, gradual approach to rate hikes.
Locally, New Zealand spending on electronic cards for March is scheduled for release today.

The New Zealand dollar edged up to 89.95 Australian cents from 89.81 cents on Friday, and gained to 4.3902 yuan from 4.3869 yuan. It weakened to 59.47 euro cents from 59.59 cents, slipped to 48.09 British pence from 48.12 pence, and fell to 73.28 yen from 73.65 yen.