NZ dollar sustains gains after jumping on National's poll recovery
By Jonathan Underhill
Sept. 13 (BusinessDesk) - The New Zealand dollar jumped late yesterday, and held onto its gains overnight, after the latest opinion poll showed the National Party back in the lead and with the numbers to govern alone.
The kiwi was trading at 72.88 US cents as at 8am in Wellington from 72.27 cents before the poll was released yesterday. The trade-weighted index rose to 75.87 from 75.24.
The Newshub-Reid Research poll showed support for National rose 4 percentage points to 47.3 percent while Labour fell 1.6 points to 37.8 percent. The Greens fell below the 5 percent threshold to sit at 4.9 percent. National's support would translate into 61 seats in the 120-seat parliament. Traders said the kiwi would have extended its gains if not for a resurgent US dollar.
"It was a classic case of expecting one thing, but the opposite playing out, with the market wrongly positioned into the latest political poll," said Sharon Zollner, senior economist at ANZ Bank New Zealand, in a note. "But it clearly highlights where the market’s attention will be over the coming couple of weeks, and speaks of whippy price action – despite the poll, the election remains anyone’s guess."
She said improving sentiment for the greenback, which has been helped by a pickup in risk sentiment, "should at least keep top-side moves limited near-term" for the kiwi.
The New Zealand dollar had fallen earlier yesterday, along with the Australian dollar, after National Australia Bank's business confidence index dropped to 5 in August from 12 in July. The kiwi dollar rose to 90.85 Australian cents from 90.24 cents.
Today, the only local data of significance is food prices for August while across the Tasman, the Westpac Banking Corp consumer confidence survey for September is due.
The kiwi rose to 80.30 yen from 79.01 yen yesterday. It gained to 60.90 euro cents from 60.43 cents and rose to 4.7628 yuan from 4.7272 yuan. It traded at 54.88 British pence from 54.83 pence.