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NZ Dollar Squeezed Up To US72.65c Then Plunges More Than 1c

Contributor:
Fuseworks Media
Fuseworks Media

Wellington, Nov 3 NZPA - The New Zealand dollar had a bumpy ride overnight as it recovered from a month-low against the greenback late yesterday morning.

From US75.50c early last week, the kiwi dropped to around US70.85c shortly before noon yesterday, then by 4.30am today was up around US72.65c before plunging to be at US71.45c by 8am.

The US dollar and yen declined broadly as data showing more evidence of a worldwide economic recovery and rising stock prices, at least for a time, eroded safe-haven demand for the US and Japanese currencies.

Data in the United States showed sharp improvements in manufacturing, construction and housing, encouraging investors to buy riskier assets with higher yields.

Earlier, surveys showed China's manufacturing sector grew at its fastest pace in 18 months in October and euro zone factory activity expanded, also boosting market sentiment.

BNZ Capital strategist Mike Jones said that after taking a bath during the past week, investors' risk appetite received some welcome respite from last night's batch of positive economic data.

Both macro and leveraged accounts had shown continued appetite to unwind NZ dollar positions yesterday and overnight, which had seen the kiwi struggle above US72c.

At the same time, speculative interest to sell the kiwi against the Australian dollar had weighed on the NZ dollar, Mr Jones said.

For today all the focus would be on the Reserve Bank of Australia rate decision at 4.30pm.

At 8am today the kiwi was at A79.46c against the Australian dollar, down from A79.84c at 5pm yesterday.

The NZ dollar was also down to 0.4847 euro from 0.4890, and down to 64.52 yen from 65.05. The trade weighted index was 64.46 at 8am from 65.07 at 5pm.

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