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NZ Dollar Firms, With Rba Rate Proving Temporary Setback

Contributor:
Fuseworks Media
Fuseworks Media

Wellington, Feb 3 NZPA - The New Zealand dollar firmed across the board overnight, yesterday's negative effect of the Reserve Bank of Australia's official cash rate decision soon wearing off.

The kiwi rose to US71.26c at 8am from US70.58c at 5pm yesterday.

Most commentators had expected the RBA to lift its official cash rate 25 basis points, but it left the rate unchanged at 3.75 percent, which saw the Australian dollar dip against other currencies and dragged the kiwi down yesterday.

ANZ Bank said in its morning brief that the RBA delivered only a temporary setback for the kiwi yesterday as it found offshore demand at US70.35c. Resumption of the path higher continued overnight but the currency avoided sellers at US71.45c.

Further tests of the topside were possible as market positioning appeared to dominate.

"Selling interests above 0.7145 may be tested but the NZD should have difficulty closing on highs due to upcoming data," ANZ senior interest rate strategist David Croy said.

The NZ dollar had firmed to A80.40c at 8am from A80.09c at 5pm, and was at 0.5102 euro from 0.5080 and 64.40 yen from 64.04.

The trade weighted index rose to 65.57 from 65.20.

Reuters reported that the US dollar weakened as strong corporate earnings and improving economic data convinced investors to wade temporarily into riskier assets and currencies where returns are higher.

Wall Street shares advanced while commodities gained, helping boost commodity-linked currencies.

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