Equity, commodities markets lift NZD

NZ currency market - close

Strong equity and commodities markets lifted the New Zealand dollar into 2010, following up on gains made last year.

The kiwi closed the local trading session at US73.27c, up from US72.57c on the last day of last year. Against the aussie, New Zealand's currency closed at A80.30c, from A81.04 last month, but receding slightly from A80.49c at 8am.

"The strength we saw last week has continued. Obviously, stronger equity markets and stronger commodity prices have seen commodity-based currencies continue to appreciate into the New Year," ANZ chief foreign exchange dealer Murray Hindley said.

The kiwi reached a high of US73.60c, before falling back to US73.27c at 5pm.

"Early indications are people seem a little bit more comfortable with risk - that's why we're seeing a stronger equity market."

Markets finished strong last year, and were continuing to strengthen, he said.

The kiwi was up against the euro, at 0.5071 from 0.5053 last session, and reached 67.53 yen - falling since pushing 68.03 this morning, but up from its December 31 close of 67.05.

The trade-weighted index increased to 66.57, from 66.31 at the end of last year.

The US currency fell as investors locked in recent gains ahead of a key US non-farm payrolls report later this week which could firmly dictate the currency's direction in the coming months.

Optimism about the prospects for a US recovery supported the greenback recently but analysts said more evidence of a strengthening economy was needed to justify further gains.

The US dollar had moved mostly higher since figures early last month showed the US economy shed a far fewer-than-expected 11,000 jobs in November.

The November jobs report, along with other above-forecast US data releases, prompted some economists to conclude employment growth may have commenced in December, but that is still a minority view.

Any sign of jobs growth raises expectations the US Federal Reserve will hike interest rates sooner rather than later - a move that would boost US dollar-based assets.

Elsewhere in markets, commodity currencies rose on higher oil and gold prices.

- NZPA