NZ dollar gains after RBA minutes 19 Jun 2012
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The New Zealand dollar rose after minutes from the Reserve Bank of Australia's last policy review showed its decision to cut rates was "finely balanced" and ahead of the Federal Reserve's meeting later this week.
The kiwi rose to 79.31 US cents at 5pm from 79.20 cents just before 8am and 79.29 cents yesterday. The trade weighted index increased to 71.63 from 71.47.
The RBA's decision to cut a quarter-point from the target cash rate to 3.5 percent this month was a "finely balanced" one, and helped limit the impact of the deteriorating situation in Europe, according to the minutes from the bank's meeting. That comes ahead of the Federal Open Market Committee's meeting on Wednesday in Washington, where markets are expecting the US central bank to stimulate the world's biggest economy further.
"It could just be an Operation Twist extension, but it could be bond purchases as well, so I wouldn't be shorting currencies at the moment," said Imre Speizer, market strategist at Westpac Banking, referring to the practice of selling an asset in the expectation of being able to buy it back at a cheaper price.
"The kiwi momentum is still positive" and it could take another leg higher, trading in a range of between 79.50 US cents and 80.50 cents, he said.
New Zealand's currency held near a five-week high after leaders at the Group of 20 nations summit in Mexico stepped up pressure on German Chancellor Angela Merkel to relax her stance on deep budget cuts for countries that need bailing out. That comes after Greek gave two pro-austerity parties a majority in the Mediterranean nation's Parliament.
Traders will be watching Fonterra Cooperative Group's online trading auction on Tuesday in the US, which will likely show a small improvement in local dairy prices. That comes ahead of Wednesday's first quarter balance of payments and Thursday's gross domestic product figures.
The New Zealand dollar rose to 62.87 euro cents from 62.19 cents yesterday, and increased to 50.55 pence from 50.45 pence. It slipped to 78.22 Australian cents from 78.32 cents yesterday, and was little changed at 62.67 yen from 62.72 yen.
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