BusinessDesk: NZ dollar gains rallies as equity markets recover

BusinessDesk: NZ dollar gains rallies as equity markets recover

By Pam Graham

The New Zealand dollar rose against the greenback as investors drew comfort from firm equity markets ahead of a potentially market-moving Australian employment report.

The kiwi dollar rose to 82.99 U.S. cents at 8 a.m. from 82.86 cents at 5 p.m. yesterday and traded as high as 83.21 U.S. cents overnight. It is expected to have support at 82.90 U.S. cents and there will be resistance at 83.30 U.S. cents.

Equity markets rallied and the gold price retreated from record highs after a court ruling in Germany cleared the way for German support of the euro zone's rescue fund.

Investors are also looking ahead to a Group of Seven meeting in France and a speech by U.S. president Barack Obama later this week. There is speculation that Obama may tweak tax rules on money flows into the U.S.

"There has been relief risk put on overnight on the basis of the German court ruling," said Stuart Ive, a senior dealer at HiFX. "Commodities rallied apart from gold. Gold was hit heavily in the European session. There were big flows out of gold into stocks," he said.

Trans-Tasman currencies were stoked yesterday by a 1.2 percent expansion in Australia’s economy, beating the 0.9 percent growth picked by analysts.

Today’s employment report for August has potential to be a market mover.

Employment data was poor last month and economists are expecting a rebound with 11,000 jobs created in August. The unemployment rate is expected to be unchanged at 5.1 percent.

The kiwi was at 77.92 Australian cents at 8 a.m. After the GDP data yesterday, the kiwi fell below 78 Australian cents for the first time in nearly two months, before recovering to 78.03 cents at 5pm.

The kiwi dollar rose to 64.12 yen from 63.86 yen yesterday and was unchanged at 58.84 euro cents. It rose to 71.61 on the trade-weighted index from 71.48 yesterday, and rose to 51.93 pence from 51.75 pence yesterday.

(BusinessDesk)

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