NZ dollar rises as global equities claw back some ground
By Jason Krupp
Aug. 15 (BusinessDesk) - The New Zealand dollar rose against the greenback after global equity markets continued to claw back some of the ground they lost in the wake of the massive sell down triggered by the U.S credit rating downgrade.
The New Zealand dollar recently traded at 83.20 U.S. cents, up from 82.09 cents in New York on Friday, and rose to 71.79 on the trade-weighted index of major trading partners' currencies from 71.12 last week.
On Wall Street, the Standard & Poor's 500 Index rose 0.5% to 1,178.81 as official data showed first-time applications for jobless benefits in the U.S. fell 7,000 in the first week of August, and retail sales increased the most in fourth months. Still, the gain was not enough to see U.S. stocks reverse declines on a weekly basis, with the index falling for a third straight week. In Europe, the Stoxx 600 Index rose 3% to 237.49.
"For now we're back to watching to equities, with movements in the kiwi and Australian dollar again correlated to the price activity in equity markets, so where equities are head, we head," said Khoon Goh, head of market economics and strategy at ANZ New Zealand. "We know such moves are tentative as we've seen so much volatility recently that we can't take anything for granted."
On the crosses, the New Zealand dollar recently traded at 80.25 Australian cents, up from 79.83 cents on Friday in New York, and rose to 63.83 Japanese yen from 62.91 yen previously. It climbed to 58.32 euro cents from 57.81 cents last week, and gained to 51.04 pence from 50.73 pence previously.
Europe's sovereign debt crisis was again in the spotlight, after Italy's second austerity package to signed into law in under a month met with widespread criticism from unions and commentators for failing to table measures to boost growth and tackle tax evasion.
The package is widely seen as a necessary move to calm jittery holders of Italian government debt and bring yields on 10-year securities below the 6% level. However a series of strike could potentially undermine these measures.
The kiwi may trade between a range of 82.80 U.S. cents and 83.56 cents, Goh said, with the bias towards the upside.