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NZ dollar gains as oil hits 6-month highs
NZ dollar gains as oil hits 6-month highs, lifting commodity linked currencies
By Tina Morrison
May 17 (BusinessDesk) - The New Zealand dollar gained as oil prices hit six-month highs, lifting currencies linked to commodity production, while the US dollar weakened.
The kiwi increased to 67.87 US cents at 8am in Wellington, from 67.71 cents at 5pm yesterday. The trade-weighted index advanced to 72.71 from 72.55.
Oil prices rose amid supply disruptions from Nigeria, Venezuela, and Canada, declining US production, and after Goldman Sachs turned more positive on the market. That buoyed broader commodity markets, pushing up the CRB Index, which measures a basket of global commodities, and stoking demand for currencies such as the kiwi and Aussie which are linked to commodity production. The US dollar slipped after a weaker than expected New York Empire State manufacturing survey.
"Oil continued to advance lifting commodities and commodity linked currencies overnight," ANZ Bank New Zealand senior economist Mark Smith and senior foreign exchange strategist Sam Tuck said in a note. "USD data disappointed overnight with few redeeming features in the headline NY Empire survey decline. However, the Empire survey is volatile and one print does not make a trend."
ANZ said the kiwi will likely trade between 67.50 US cents and 68.40 cents today.
In New Zealand today, traders will be eyeing the Reserve Bank's quarterly survey of inflation expectations as they mull the outlook for interest rates.
In Australia, the Reserve Bank releases the minutes to its May meeting and the ANZ-Roy Morgan consumer confidence survey is published.
The New Zealand dollar advanced to 93.06 Australian cents from 92.96 cents, gained to 59.95 euro cents from 59.86 cents, increased to 4.4240 yuan from 4.4184 yuan and was little changed at 47.14 British pence from 47.13 pence.
The kiwi jumped to 73.94 yen from 73.62 yen after Japanese officials reiterated that they were willing to intervene to weaken the nation's currency. Traders have speculated that Japan wouldn't intervene ahead of a G7 meeting the country is hosting later this week.
(BusinessDesk)
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