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New Zealand dlr in demand, hits record high on euro

01 February, 2012 - Reuters

WELLINGTON, Feb 1 (Reuters) - The Australian dollar edged back from multi-month highs early on Wednesday on weak U.S. data and slow Greek debt talks, but month-end demand still sent the New Zealand currency on a tear higher.

  • The kiwi dollar was firm at $0.8253 having spiked as high as $0.8301 overnight, the best since mid-September. Traders cited demand from hedge funds and momentum buying on the break of $0.8250, but were still puzzled by the scale of the gains.
  • Having risen nearly 6 pct last month, the kiwi looks overbought technically, with a test of $0.8220, then $0.8157 possible while resistance sitting around $0.8343.
  • The kiwi also shot up on the euro, which slumped 1.2 pct to a fresh record low of NZ$1.5806 overnight.
  • The Aussie at $1.0606 early, little changed from $1.0601 in NY. It rose to a near three-month high of $1.0685 overnight from $1.0637 in late local trade on Tuesday before giving up gains on U.S. data.
  • Aussie up 4.3 pct in January and charts show no sign of slowing, with support found at the 10-day MA of $1.0544 and resistance around $1.0688 and then $1.0697.
  • Still, no major pressure expected for the Antipodeans as they remain attractive after the Federal Reserve pledges to keep rates low for longer, fuelling carry trades.
  • Both currencies also firm against the euro, which is plagued with Greek debt woes. The euro weakens to A$1.2316

    • , from A$1.2396, and to .

  • The euro surrenders all gains and traded lower against the dollar as Greek debt restructuring talks drag on. Weak U.S. home prices and a souring consumer confidence also dent sentiment.
  • A resurgent yen also raises anticipation of a possible intervention from Japanese authorities. The Aussie lower at 80.87 yen from 8107 yen while the kiwi steady around 62.80 yen , but off last week's high of 63.83.
  • Risk assets all lower following disappointing US data , including U.S. stocks, the CRB commodity index , gold, copper and oil.
  • Australia report house prices for the last quarter of 2011 later Wednesday with analysts expecting another modest decline

    .

  • Aussie around NZ$1.2855 after slipping to NZ$1.2819 , lowest since mid October, as the Reserve Bank of Australia is seen cutting rates to 4 pct at its next policy meeting on Feb. 7.
  • The Reserve Bank of NZ has signalled that rates are likely to stay on hold at 2.5 pct this year. But markets pricing implies a 22 pct chance of a 25 bps cut.
  • Australian bond futures higher, tracking U.S. Treasuries on European debt crisis. The three-year contract indicated up 0.03 point at 96.890, the 10-year contract 0.045 points higher at 96.270.
  • NZ government bond prices also gain, with yields down 4.5 bps across the curve.

    (Australia and New Zealand bureaux)

    Copyright Thomson Reuters 2012. All rights reserved.

    The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.

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