NZ dollar rises against Aussie, steady vs USD

NZ dollar rises against Aussie, steady vs USD on easing Italy worries

By Rebecca Howard

May 31 (BusinessDesk) - The New Zealand dollar gained against the Australian dollar and was steady against the greenback as global risk appetite outweighed weak domestic business confidence.

The kiwi traded at 92.38 Australian cents as at 5pm in Wellington from 92.19 Australian cents as at 8am and from 92.15 cents late yesterday. It was at 69.84 US cents from 69.89 US cents as at 8am and 69.10 cents late yesterday.

The kiwi got a lift overnight when fears about political turmoil in Italy eased and held those gains in Asian trading. Markets were cheered after reports that Italy’s President Sergio Mattarella has attempted to broker a deal to form a new government.

"What a difference 24 hours in markets can make," said Mark Johnson, senior trader foreign exchange at OMF in Wellington.

It got a lift against the Aussie after first-quarter private capital expenditure survey was weaker than expected, with only a small rise in actual business investment of 0.4 percent versus an expected 1.0 percent rise.

The New Zealand dollar also held its gains despite news that New Zealand business confidence got even gloomier in May. A net 27 percent of 354 firms surveyed in the ANZ business outlook survey expect general business conditions to deteriorate in the coming 12 months, compared to a net 23 percent pessimists in April. Firms were also the most pessimistic they've been about their own business since November with a net 14 percent predicting increased activity, down from 18 percent in April.

However, "the market has largely taken that in its stride. It's being looked through," said Johnson. He added that the kiwi has resistance around 69.85 US cents and it may languish around these levels until there's a new catalyst. US jobs data overnight Friday could push it around, he said.

The kiwi traded at 59.85 euro cents from 59.86 cents and the trade-weighted index gained to 73.26 from 72.85 yesterday.

The kiwi jumped to 75.85 yen from 75.04 yen yesterday and rose to 4.4722 yuan from 4.4405 yuan. It rose to 52.50 British pence from 52.12 pence.

New Zealand's two-year swap rate rose 1 basis point to 2.20 percent while 10-year swaps rose one to 3.08 percent.

(BusinessDesk)

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