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NZ Dollar Retreats After Reaching 11-Week High

Fuseworks Media
Fuseworks Media

Wellington, April 3 NZPA - The New Zealand dollar reached its highest level against the greenback in more than 11 weeks today, then retreated.

The kiwi peaked at US59.01c but eased back to US58.56c by 5pm, which was still up from US56.80c at 5pm yesterday.

The rise came care of a fall in the US dollar as gains in Wall Street stocks eroded the greenback's safe-haven appeal.

The improvement in investors' risk appetite sparked a rally in higher-yielding, commodity currencies such as the Australian and NZ dollars.

US stocks jumped after world leaders at the Group of 20 summit agreed to pump an additional trillion US dollars into the global economy to fight the financial crisis, and on US accounting rule changes aimed at giving banks flexibility when dealing with toxic assets.

BNZ Capital currency strategist Danica Hampton said the NZ dollar also rose on buying by speculators and when the run was over the currency retreated.

"We had short-term speculative players talking about stop-loss orders around US58.50c and some targeting to try to break those stops went on," she said.

Once the currency got near US59c traders took profits and squared up positions ahead of non-farm payroll data in the US. "So it wasn't news specific, just market positioning," she said. The kiwi rose strongly against the Japanese currency and by the local close was at 58.36 yen from 56.05 yen yesterday.

The NZ dollar was up to 0.4355 euro from 0.4278 at the local close yesterday, and rose against the Australian dollar to A81.85c form A80.78c. The trade weighted index was up to 58.10 from 56.69 yesterday.

The euro rose strongly against the greenback and yen after the European Central Bank cut lending rates by just 25 basis points to 1.25 percent, confounding expectations for a deeper cut to 1 percent.

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