Kiwi hits 8-yr high against aussie

The New Zealand dollar hit an eight-year high against the aussie this morning as the strong New Zealand economic story continues.

The kiwi touched A93.96c early before pulling back slightly to trade at A93.50c.

Today's high just eclipsed the New Zealand dollar's 2008 highs to trade at levels not seen since 2005.

ANZ senior foreign exchange manager Sam Tuck said the big debate now was how long the kiwi could stay at these levels against the Australian dollar.

The cross was stretched on a long-term basis but there was a precedentfrom the mid-2000s for the kiwi to trade in this elevated range for the short to medium term, Tuck said.

"The timing question looms very very large," he said.

However, there was no reason for the kiwi to drop against the aussie unless the New Zealand and Australian economic stories changed.

"We'd need to see some cracks in the New Zealand story . . . or we need to see a turnaround in the Australian story," Tuck said.

Australia was suffering from the aftermath of its allocation of resources to deal with the mining boom.

"[The Australian economy] needs to rebalance away from sending everyone away to drive trucks in Western Australia," he said.

The Australian employment report due early this afternoon was likely to move markets, with strong figures more likely to affect the exchange rate than a soft report, he said.

Tuck said he expected the kiwi to trade between A92.80c and A94.20c today.

Meanwhile, the New Zealand dollar dropped back against the greenback overnight as the United States continues to print strong economic data.

The kiwi was trading at US83.30c this morning, down from US83.95c at 5pm yesterday.

Tuck said the US released strong manufacturing and employment data overnight, which saw the kiwi slip against the greenback.

However, the New Zealand dollar had proved more resilient than its counterparts in relation to US dollar movements, due to the strong New Zealand economy, he said.

The continuation of strong economic data out of the US gave markets a reason to further discount the weak US payrolls figures released last Friday.

This morning the US Federal Reserve released its Beige Book, which gives anecdotal information on the state of the US economy ahead of the central bank's meeting at the end of the month.

The general story was optimistic, Tuck said, adding that the economic data pointed to economic growth and wage-price increases.

Tuck said he expected the kiwi to trade between US83c and US83.60c today.

US Philadelphia Federal Reserve Business Outlook Survey, the Federal Reserve speakers' addresses, and US industrial production figures could move markets within the next few days.

Fairfax Media