NZ dollar gains as data fuels Fed stimulus
Fri, 20 Jul 2012 9:55a.m.
The New Zealand dollar rose against the greenback and reached a record versus the euro on speculation the Federal Reserve will do more to stimulate the US economy and as sales of Spanish bonds met lukewarm demand.
The New Zealand dollar rose as high as 80.54 US cents from 80.05 cents on Thursday at 5pm. It traded at 80.33 cents just before 8am.
The Kiwi peaked at 65.62 euro cents, the highest level since the single currency entered circulation in 2002, up from 65.15 cents on Thursday. It traded early Friday morning at 65.44 cents.
Speculation Fed chairman Ben Bernanke will be forced to boost economic growth increased after sales of existing US homes unexpectedly dropped and manufacturing in the Philadelphia region contracted for a third month.
"While he has not put forward the timing on quantitative easing it's just a matter of when," said Alex Sinton, senior dealer at ANZ New Zealand.
"On the day the New Zealand dollar will stay in the 80 cent range - I don't know if we can break 80.60."
Dr Bernanke kept open the possibility of more stimulus, including debt purchases under a third round of quantitative easing at his annual congress testimony on Thursday.
Demand declined at a Spanish bond sale even as German lawmakers backed a euro-area bailout of the nation's banks.
Investors offered to buy 1.9 times the amount offered of two-year notes, down from 4.26 times last month, while demand for five-year securities dropped to 2.06 times from 3.44 in June, Bloomberg reported.
The New Zealand dollar eased to 76.98 Australian cents from 77.05 cents on Thursday and increased to 63.13 yen from 62.87 yen.
The trade weighted index increased to 72.50 from 72.34.
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