NZ dollar rallies on global optimism
Tue, 13 Mar 2012 7:16p.m.
The New Zealand dollar rallied in local trading amid growing optimism the US will help drive global growth, ahead of the Federal Open Market Committee meeting in Washington DC.
The dollar rose to 82.30 US cents at 5pm from 81.69 cents at 8am, and was up from 81.79 cents.
The trade-weighted index gained to 73.27 from 72.89.
Investors are speculating the FOMC will be more bullish on US growth in its monetary policy statement this week, pushing up risk-sensitive assets.
Stocks across Asia rallied amid expectations of a more upbeat US growth outlook, with Japan's Nikkei 200 up 1 percent to 9,990.84, Hong Kong's Hang Seng up 1.1 percent to 21366.01 and Australia's S&P/ASX 200 up 1.2 per cent to 4242.4 in afternoon trading.
Traders have started betting on an increase in the Fed Funds rate from its near-zero setting, pricing in 17 basis points of increases over the coming 12 months, according to the Overnight Index Swap curve.
"People in the marketplace are getting a bit bullish and I think they are expecting the FOMC will come out and be more positive about US data and global growth," said Joseph Capurso, currency strategist at Commonwealth Bank of Australia in Sydney.
"Commodity currencies like the kiwi and Aussie have started to lift," on that optimism, he said, referring to the trans-Tasman currencies colloquially.
New Zealand's economic recovery continues to seep into the local data, as better-than-expected housing figures helped stoke the appeal of the kiwi dollar with property values still climbing and sales numbers bouncing back from record lows last year.
The New Zealand dollar was little changed at 62.41 euro cents from 62.49 cents, and climbed to 52.54 pence from 52.27 pence. It rose to 77.97 Australian cents from 77.60 cents, and advanced to 67.67 yen from 67.29 yen.
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