The New Zealand dollar may rise this week on speculation Spain will tap European Central Bank funding to bail out its banks and on signs that Greeks will accept EU-impose austerity measures as they head back to the polls.

The New Zealand dollar recently traded at 75.95 US cents, up from 72.75 cents at 8am. That's right in the middle of this week's predicted range of 73.70 cents to 78 cents, according to a poll of five analysts by BusinessDesk.

Of the analysts surveyed, three said the kiwi will finish the week higher and two lower.

Bankia, Spain's fourth-biggest bank, is seeking 19 billion euros of state funding after increasing its provisions for bad debts. The government had previously estimated 15 billion euros would be enough to shore up its entire banking sector.


Spain may inject capital into the bank in the form of government debt that could then be used to raise money from the European Central Bank, the Guardian reported. That's helped ease investors' nerves about the state of Spain's financial sector and the risks that Europe's debt crisis will weigh on global growth and growth-linked currencies such as the kiwi.

"Spain is being carefully watched - there is a fair amount of noise but the ECB and the International Monetary Fund will not let Greece get into any more trouble so they are certainty not going to let Spain get into trouble," said Tim Kelleher, head of institutional FX sales NZ ASB Institutional.

On Friday, ratings agency Standard & Poor's downgraded the credit ratings of five Spanish banks, just one month after it cut the nation's credit rating by two notches to BBB+.

The New Zealand dollar rose to 60.54 euro cents from 60.14 cents at the close of trading in New York on Friday after all five Greek political polls released on Saturday favoured the pro-bailout New Democracy Party ahead of the far left anti-bailout party. The indebted nation will hold a fresh round of elections on June 17 after its three main political parties were unable to form a coalition following the May 6 elections.

"That improvement in the polls is an important thing," said Imre Speizer, market strategist at Westpac Bank. "Greece's behaviour in the euro-zone is the main driver in the markets."

"I think the market will swing back and forth with the polls - who knows how it will play out till mid-June," he said.

European leaders meeting in Brussels last week were unable to agree on new measures to support the region's growth, despite collectively agreeing that Greece should remain in the euro.

Euro-zone consumer confidence figures are due out on Wednesday, while in Ireland the government will vote on its financial stability report this Friday


Markets in the world's largest economy, the US, are closed today for the Memorial Day holiday.

Tuesday kick-starts a data-heavy week in the US with the release of the Case-Shiller home price index and consumer confidence on Tuesday and pending home sales on Wednesday. Investors will be searching for signs that the housing market is stabilising after new homes sales rose 3.3 per cent in April, while existing homes sales climbed 3.4 per cent to their best annual pace since May 2010.

US employment change, gross domestic product (second estimate) and initial jobless claims are due out on Thursday. That's followed by non-farm payrolls on Friday, with economists also forecasting signs of improvement. Payroll figures are expected to have climbed by 150,000 workers in May, from 115,000 a month earlier, according to a Bloomberg survey.

"The irony is we could see five days of little movement in the currency and then a massive shift over the weekend," said Peter Cavanaugh, senior client adviser at Bancorp.

China, New Zealand's second-largest export market, will release its official performance of manufacturing index on Friday, following last week's HSBC flash purchasing manufacturing index which showed further contraction on 48.7 from a final 49.3 reading in April. If the number is confirmed it will mark the longest run of below 50 readings since the start of the financial crisis.

Australia, New Zealand's largest export market, will release its retail trade figures Wednesday, followed by building approvals on Thursday.

There is no significant data due out in New Zealand until Wednesday, with the release of April building consents by Statistics New Zealand. That's followed by the Reserve Bank's credit and monetary aggregates and the National Bank of New Zealand business outlook on Thursday. ANZ's commodity price index is due out on Friday.