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NZ dollar edges up

NZ dollar edges up; bets on stronger kiwi leave it vulnerable to correction

By Jonathan Underhill

The kiwi was trading at 72.80 US cents as at 8am in Wellington from 72.84 cents in New York on Friday and from 72.67 cents in Asia last week. The trade-weighted index was at 78.49, little changed from last week.

US Commodity Futures Trading Commission data shows that after traders had been betting against the kiwi, taking 'short' positions, they now held the highest net speculative 'long' NZ dollar positions in more than four years. ANZ Bank New Zealand said long positions increased the week before last by US$3.8 billion.

"While New Zealand’s economic credentials demand respect, that build-up in itself leaves us wary of a correction lower," said Cameron Bagrie, chief economist at ANZ Bank New Zealand, in a note. He said the kiwi will meet resistance should it rise as high as 73.20 US cents.

The week ahead brings merchandise trade tomorrow and both May building consents and business confidence on Friday, which will provide an update on how the domestic economy may be faring.

Globally, investors are awaiting a US Federal Reserve chair Janet Yellen speech in London on Tuesday, where the topic is global economic issues and where they will be listening for any hint of a third US rate hike this year.

The kiwi traded at 57.15 British pence from 57.26 pence on Friday in New York and traded at 80.94 yen from 81 yen. It fell to 4.9755 yuan from 4.9769 yuan and traded at 64.99 euro cents from 65.09 cents. The kiwi dollar rose to 96.18 Australian cents from 96.10 cents in New York on Friday.



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