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NZ Dollar Retreats From Seven-month High

Contributor:
Fuseworks Media
Fuseworks Media

Wellington, May 27 NZPA - The New Zealand dollar hit a new seven-month high around US62.60c after data showed an improvement in US consumer confidence but it then retreated on news of a lower Fonterra payout forecast.

The NZ dollar briefly dropped under US61c around 10.45pm yesterday but then shot up to its peak just after 8am today, having been at US61.79c at 5pm yesterday. It retreated to US62.15c by 5pm today.

"The NZ dollar was sold off on the Fonterra payout," ANZ Institutional Bank chief foreign exchange dealer Murray Hindley said.

Farmers said the Fonterra 2010 season forecast of $4.55/kg of milksolids was serious wake-up call for the Government because it amounted to $780 million less in dairy farm income compared to the current season.

Mr Hindley said the currency fell from US62.50c to US62.05c on the news.

Tomorrow attention will turn to the Government's budget due for release at 2pm local time and statement later in the day from Standard and Poor's.

On Tuesday night the international backdrop was brighter.

"Hopes the US economy is on the road to recovery, combined with analyst upgrades on Apple, triggered a strong surge in US equities," BNZ Capital currency strategist Danica Hampton said.

"Strong gains on Wall Street and recovering risk appetite saw investors bail out of their safe haven USD positions."

The NZ dollar was firmer against the European and Japanese currencies, rising to 0.4445 euro by 5pm from 0.4419 yesterday, and to 59.30 yen from 58.50.

Against the Australian dollar, the NZ dollar was A78.96c at today's local close from A79.37c yesterday, while the trade weighted index rose to 59.08 at 5pm from 58.80 yesterday.

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