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NZ Dollar Breaks Week-Long Ceiling

Contributor:
Fuseworks Media
Fuseworks Media

Wellington, Jan 29 NZPA - The New Zealand dollar broke through the US53.40 cent barrier overnight, reaching a seven-day high against Uncle Sam.

Just before midnight it dropped to as low as US52.48c after being worth US52.96c at 5pm yesterday. The US53.40c barrier looked to be well and truly broken as the kiwi hit a high of up to US53.72c just after 8am today.

The ANZ Morning Brief predicted today's Reserve Bank official cash rate announcement would see the dollar break its range of the last week, although the question remained as to which direction.

"With market expectations of a substantial cut already priced in, a great deal of focus will be placed on Dr Bollard's follow up statement."

The bank expected the kiwi to trade in a range today between US51.60c and US54c.

The dollar was up slightly against all other currencies.

Against the Australian dollar it was worth A79.80c, against the euro 0.4047, against the British pound 37.45p and against the Japanese yen 48.21.

The trade weighted index stood at 37.45.

Meanwhile, in overseas foreign exchanges, the US dollar and yen fell as optimism about stimulus spending lifted stock markets and investors looked to the end of a Federal Reserve meeting for word of new efforts to jump-start bank lending.

Sterling continued its rebound from last week's 23-year low against the dollar while the euro also rose, helped by surprise gains in French and German consumer confidence, though a round of profit-taking knocked it off a session peak above $1.33.

The euro was up 0.5 percent at $1.3245 after an earlier move above $1.33 sparked selling interest.

It rose 1.6 percent to 119 yen while sterling added 1.3 percent to $1.4323 after falling to $1.3502 last week.

The dollar rose 1 percent to 89.90 yen, and Steven Butler, head of currency trading at Scotia Capital in Toronto, said a move above 90.20 yen could set up even bigger gains.

The Australian dollar rose 1.1 percent to $0.6701 after data showing the biggest decline in consumer prices in a decade left investors expecting aggressive interest rate cuts and stimulus spending.

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