Kiwi gains as risk appetite returns
The New Zealand dollar rose against the greenback in overnight trading as strong global economic data boosted appetite for growth currencies.
The New Zealand dollar was trading at US79.05 cents this morning up from US78.08c at 5pm yesterday.
The Trade-Weighted Index of major trading partners was 73.9 shortly after 7am.
OM Financial senior foreign exchange and derivatives adviser Stuart Ive said the two factors affecting the market overnight were improved global data and the situation in Syria.
A spate of strong global data, including strong services PMI in China and total vehicle sales in the United States show improvements in the global economy, Ive said.
This meant the market's risk appetite came back, which saw people buying growth currencies like the kiwi and the aussie.
"There was a big rebound in the last 24 hours," he said.
A US senate committee put limitations on a possible US-led military intervention in Syria, which quelled the market's fears about contagion of risk-aversion, and Syria looked to be a lesser event now, Ive said.
The US federal Reserve's beige book, which was released this morning, showed moderate-to-modest growth in the US economy, Ive said.
While it was nothing spectacular, the recent strong data coupled with US non-farm payrolls data due Friday [Saturday morning NZT] was likely to be enough to "get the ball rolling" on easing the US central bank's stimulus programme, he said.
A start to a cutback in asset purchases was likely to push the kiwi back down against the greenback but investors were looking to book profits ahead to the release of the data.
Ive said he expected the kiwi to trade between US78.80c and US79.30c today.
Markets would also be watching the Bank of Japan with "with a lazy eye" as it was expected to increase stimulus which could strengthen the kiwi in the future, he said.
The kiwi was trading at A86.25c this morning.
- © Fairfax NZ News