JASON KRUPP Last updated 08:45 02/02/2012
The New Zealand dollar gained more than a cent against the US dollar overnight, as upbeat global factory data and hopes of a final Greek debt writedown deal boosted investors' appetite for risk currencies.
The kiwi recently traded at US$83.37 cents, up from US$82.35c at 5pm yesterday, its highest level in five months. On the Trade Weighted Index of major trading partners' currencies it rose to 73.05 from 72.20.
The first kick higher came after Greek Finance Minister Evangelos Venizelos said an agreement between the country and its private sector creditors over the level of writedowns on longer-dated Athenian paper was "one formal step away", according to Reuters.
The deal reportedly consists of a 72 per cent haircut to the face value of the bonds, a coupon of 3.6 per cent, and a warrant that secures an additional payment for creditors if Greece exceeds growth targets.
Euro zone fears waned further after ratings agency Fitch said Portugal does not pose the same default risk as Greece, even though the country is likely to imminently call for the a second bailout.
Risk appetites also surged in response to improve global manufacturing data, with the euro zone manufacturing purchasing managers' survey revised upwards and German factories posting growth. Meanwhile in the US, the ISM manufacturing measure extended gains for a third month, with new orders rising while inventories fell.
That saw the euro pare losses seen earlier in the week, and provided a boost to risk currencies such as the kiwi and Australian dollar, which was recently trading at a three month high of US1.0724.
"There is no doubt the kiwi looks overstretched based on fundamentals, but that's probably a trend that will continue in the short term," said Mike Jones, a market strategist at Bank of New Zealand. "Maybe when the kiwi hits US84c or US85c we'll see a correction."
On the crosses, the kiwi recently traded at 77.75 Australian cents, up from A77.54c yesterday, and it rose to 63.62 yen from 62.73 yen. It climbed to 63.22 euro cents from 62.98 euro cents previously, and gained to 52.60 pence from 52.56 pence at 5pm.
The dairy price slipped 0.9 per cent at Fonterra's latest online auction, with an average winning price of US$3,666 per tonne, with declines seen across all categories although prices remained at elevated levels.
The kiwi may trade between a range of US82.50c and US83.80c, Jones said, with the bias tipped towards the upside over the course of the day.
http://www.stuff.co.nz/business/market-data/currencies/6353213/NZ-dollar-surges-to-5-month-high
