NZ dollar extends gain as Australian growth keeps investors upbeat
By Paul McBeth
March 6 (BusinessDesk) - The New Zealand dollar extended gains through the local session after Australian growth renewed investors' interest in the trans-Tasman currencies after rising dairy prices and strong US equity markets sparked off an earlier rally.
The kiwi rose to 83.28 US cents at 5pm in Wellington from 83.18 cents at 8.30am and 82.92 cents yesterday. The trade-weighted index advanced to 76.32 from 76.12.
Australian gross domestic product grew 0.6 percent in the last three months of 2012 from the September quarter, which was also revised upwards, the Bureau of Statistics announced. The prior period was welcomed by investors who were in a good mood after the Dow Jones Industrial Average closed at a record high, and as drought in New Zealand pushed dairy prices up 10 percent at the latest online auction.
"We were swamped by other good news - it's hard to say how much impact dairy had, though such a big jump did show some reaction (in the kiwi)," said Imre Speizer, market strategist at Westpac Banking in Auckland. "People have forgotten about Italy and (the US fiscal) sequester for now."
Speizer said the currency may trade between 82.60 US cents and 83.50 cents
Local dairy prices may continue to rise after the government extended its drought-zone to cover most of New Zealand's North Island. The arid conditions prompted Fonterra Cooperative Group to lower its forecast milk collection to 1 percent growth for the season.
Government figures showed the volume of building activity grew 1.8 percent in the December quarter, slowing from a rapid pace in the three months ended Sept. 30. Construction is expected to provide the major stimulus to New Zealand's economy in coming years as the Canterbury rebuild gathers pace, though today's figures showed activity around the country was relatively constant.
The local currency rose to 77.58 yen from 77.24 yen yesterday, was little changed at 80.91 Australian cents from 81 cents. It increased to 63.75 euro cents from 63.62 cents yesterday and advanced to 55 British pence from 54.78 pence.