KEY POINTS:
The New Zealand dollar strengthened against the currencies of its major trading partners today, including the Australian dollar which sprinted over US91c to a 24-year high.
The kiwi rose to US76.38c, a cent higher than yesterday's close.
While the New Zealand sharemarket fell one per cent, the Japanese market was buoyant, and investors appeared quite prepared to take on more risk in the carry trade.
The US dollar was stuck near an all-time low against the euro as poor US data on durable goods orders and new home sales the previous day reinforced expectations for a Federal Reserve rate cut next week.
The US dollar's slide has helped fuel a surge in commodities, driving gold to a 28-year peak of US$773 ($1030) an ounce and US crude to a record high above US$91 a barrel.
Sharada Selvanathan, a currency strategist at BNP Paribas in Hong Kong, said investors were favouring higher-yielding currencies like the aussie and kiwi on hopes further Fed rate cuts will underpin the US economy and equity markets.
"However, if sentiment changes to the view that Fed rate cuts are not going to prevent a US recession, then we will see a significant rise in risk aversion that would ironically be supportive of the dollar and put higher-yielding currencies such as the Aussie and kiwi under pressure," she said.
The Australian dollar closed on US91.03c, having peaked at US91.19c and against US90.28c yesterday. The kiwi cross stregthened to A83.89c from A83.47c yesterday.
The New Zealand dollar trade-weighted index rose to 71.03 from 70.24 yesterday.
The souring US economy and the likelihood of further Fed rate cuts has prompted investors to dump the dollar in favour of the euro and other major currencies whose economies have weathered the turmoil in credit markets over the past few months.
Reuters currency rates:
4.30 today 5pm yesterday
NZ dlr/US dlr US76.38c US75.36c
NZ dlr/Aust dlr A83.89c A83.47c
NZ dlr/euro 0.5334 0.5281
NZ dlr/yen 87.30 86.95
NZ dlr/stg 37.22p 36.81p
NZ TWI 71.03 70.24
Australian dollar US91.03c US90.28c
Euro/US dollar 1.4322 1.4269
US dollar/yen 114.28 114.07
- NZPA
