NZ dollar rises to week-high as sentiment improves, increasing demand for risky currencies
By Tina Morrison
Feb. 7 (BusinessDesk) – The New Zealand dollar rose to a week high as sentiment improved, turning investor attention to riskier assets such as the kiwi.
The kiwi touched 82.82 US cents this morning, and was at 82.68 cents at 8am in Wellington from 82.38 cents at 5pm yesterday.
Concern about emerging market weakness has abated, pushing up European and US equities, US interest rates and increasing demand for the Aussie, kiwi and emerging currencies. Demand fell for safe haven assets such as the yen.
“The only obvious explanation is the improvement in risk appetite last night,” said Imre Speizer, senior market strategist at Westpac Banking Corp. in New Zealand. “There was no fresh catalyst for that improvement, it is simply that emerging markets remain stable and that is benefiting the risky currencies like the Aussie and the kiwi.”
The New Zealand dollar touched a week high of 84.42 yen this morning, and was at 84.21 yen at 8am from 83.59 yen yesterday.
The kiwi advanced to 92.13 Australian cents from 91.87 cents yesterday.
Traders will be eyeing the Reserve Bank of Australia’s Statement on Monetary Policy, scheduled for release at 1:30pm New Zealand time, for revisions to key economic forecasts. The RBA this week dropped its easing bias for a more neutral stance.
Meanwhile, New Zealand Prime Minister John Key and Australian Prime Minister Tony Abbott are scheduled to speak in Sydney this afternoon.
At 2:45pm New Zealand time, the HSBC/Markit PMI Services index for January may give an indication on how Asia’s largest economy is tracking.
Tonight, all eyes will be on the key US non-farm payrolls report for signs of a continued improvement in the US economy.
The local currency was little changed at 60.81 euro cents from 60.90 cents yesterday, after the European Central Bank kept its benchmark interest rate unchanged and the bank’s president Mario Draghi said there is no euro zone deflation problem.
The kiwi edged up to 50.62 British pence from 50.51 pence yesterday after the Bank of England kept rates on hold.