NZ dollar rises to 3-week high amid global growth concerns 16 Oct 2014
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NZ dollar rises to 3-week high amid global growth concerns as dairy prices gain
By Tina Morrison
Oct. 16 (BusinessDesk) - The New Zealand dollar touched a three-week high even amid concerns about global economic growth, and as dairy product prices rose in the latest auction.
The kiwi edged close to its key 80 US cent resistance level, touching a high of 79.94 cents, and was trading at 79.52 cents at 8am in Wellington, from 78.37 cents at 5pm yesterday. The trade-weighted index gained to 77.13 from 76.43 yesterday.
The dollar index, which measures the greenback against a basket of currencies, dropped to its lowest in almost a month after weaker-than-expected US retail sales and producer prices data revived concerns about growth in the world's largest economy. That added to worries about global economic growth which were heightened after a report showed Chinese consumer prices slowed more than expected in September to a nearly five-year low. So-called safe haven currencies such as the yen and the Swiss franc rose.
"We have held up relatively well," said Bank of New Zealand currency strategist Raiko Shareef. "Overall, the market as a whole is very panicked so there is probably more downside here than upside."
Early this morning, dairy product prices rose in Fonterra Cooperative Group's fortnightly GlobalDairyTrade auction, recovering from the lowest level in five years, as less product was offered for sale.
While the rise in dairy prices is positive for kiwi, it didn't fully explain the local currency's gain overnight because demand for New Zealand dairy products would be affected by weaker global growth, said the BNZ's Shareef.
"It's definitely a positive result but I don't think that that would have been a focus really on a night like this when everyone is more concerned about what's going on globally," he said.
The kiwi may have been bolstered by traders getting out of their "short" positions, he said. A short position is a bet an asset will fall in value.
The New Zealand dollar faces resistance at 80 US cents and support at 78.50 cents today, he said.
The BNZ-BusinessNZ Performance of Manufacturing Index for September will be released at 10:30am
The New Zealand dollar gained to 90.64 Australian cents from 89.89 cents yesterday ahead of reports on Australian inflation expectations and the Reserve Bank of Australia's foreign exchange transactions.
The kiwi advanced to 62.24 euro cents from 61.98 cents yesterday as traders await data on European inflation.
The local currency rose to 49.91 British pence from 49.26 pence, and to 84.29 yen from 84.01 yen.
(BusinessDesk)
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