Kiwi gains from weaker US data
The New Zealand dollar is riding on its Australian counterpart's coat-tails to push higher against the US dollar overnight.
The kiwi was trading at US84.87 cents at 7am, after reaching a four-month high of US85.02c in early trading, up from US84.22c at 5pm yesterday.
ANZ senior foreign exchange manager Sam Tuck said the strength of the kiwi was due to slightly soft employment and non-manufacturing figures out of the US this week and stronger Australian GDP and trade figures.
Global investors were still a "little bit cautious" in terms of the US recovery, Tuck said.
The data was not bad but the world's largest economy did not seem to be growing either.
Meanwhile, Australian GDP grew more than expected during the December quarter at a seasonally adjusted 0.8 per cent. The Australian dollar pushed higher on the news and the kiwi was "taken along for the ride".
"Our big brother does well and people re-rate the kiwi up," Tuck said.
The kiwi was slightly lower against the aussie, trading at A93.17c this morning, down from A93.41c at 5pm yesterday.
But the New Zealand dollar had largely paced its Australian counterpart as it moved higher against global currencies.
Better Australian economic data showed the Reserve Bank of Australia's economic stimulus was starting to work, he said.
However, Australia was still facing "big structural problems".
Tuck said this was only one lot of good data but it showed Australia had the potential to start turning itself around if it could increase productivity and redistribute workers away from the mining sector.
Events in Eastern Europe continued to unfold overnight, with the Crimean Government voting to join Russia. An official referendum will be held on March 16.
Tuck said while the development was not necessarily positive from a geopolitical point of view it did add legitimacy to Russia's actions and made the threat of global conflict less likely.
And the reduced threat of global conflict had helped settle global markets and risk assets.
Tuck said he expected the New Zealand dollar to trade between US84.50c and US85.50c today.
Ultimately, the kiwi would pull back from its present levels and any further short-term gains against the US would be due to the greenback moving lower rather than New Zealand dollar strength, Tuck said.
- Fairfax Media