NZ dollar gains as equities bounce on Bernanke comments
By Jason Krupp
Aug. 29 (BusinessDesk) - The New Zealand dollar rose against the greenback, tracking global equity markets higher as investors took solace from Federal Reserve Chairman Ben Bernanke's comments at Jackson Hole that the U.S. isn’t in bad enough shape to warrant immediate stimulus.
The New Zealand dollar recently traded at 83.81 U.S. cents, up from 83.12 cents on Friday in New York, and rose to 71.69 on the trade-weighted index of major trading partners' currencies from 71.37 previously.
Equity markets, expecting hints to further monetary policy easing, were left wanting on Friday night after Bernanke delivered a speech the central bankers' summit that was light on details, and gave no indication as to what the Fed's next move will be.
However, they appeared to take some solace from the comment that "the growth fundamentals of the U.S. do not appear to have been permanently altered by the shocks of the past four years". On Wall Street, the Standard & Poor's 500 Index rose 1.5% to 1176.80, and commodities rose 1% to 335.25 as measured by the 19-commodity Thompson Reuters Jefferies CRB Index.
"Without a doubt the currency was driven by equity moves offshore," said Alex Sinton, senior deal at ANZ New Zealand. "However equities look very fickle at the moment, so it's just not a one-way path higher for the currency from here."
On the crosses, the kiwi recently traded at 79.26 Australian cents, little changed from 79.24 cents on Friday, and rose to 64.43 Japanese yen from 64.03 yen previously. It gained to 57.74 euro cents from 57.61 cents last week, and rose to 51.13 pence from 50.97 pence previously.
The kiwi may trade between a range of 83.60 U.S. cents and 84.24 cents, Sinton said, with the currency likely consolidate around these levels waiting on offshore equity markets to open.