Fri, 30 Oct 2009 9:13a.m.
The New Zealand dollar rebounded overnight from three-week lows, making up some of the ground lost earlier this week.
By 8am the kiwi was buying US73.55c, having dipped to a three-week low around US71.60c yesterday afternoon.
Yesterday the New Zealand currency was hit by global risk aversion, along with comments from the Reserve Bank indicating the official cash rate (OCR) would stay unchanged for longer than many in the market had been expecting .
The NZ dollar had started falling from around US75.50c early on Tuesday and was around US72.80c at 9am yesterday when the Reserve Bank announced it was leaving the OCR on 2.5 percent.
Reuters reported data showing the United States economy grew in the third quarter, for the first time in more than a year , renewed optimism about a global economic recovery, prompting traders to buy higher-yielding currencies such as the Australian and NZ dollars.
The US economy grew at a 3.5 percent annual rate in the July-September period, snapping four down quarters and exceeding forecasts for a 3.3 percent rate.
While the release of the US data around 1.30am did give the kiwi a boost at a point where it appeared to be flagging after earlier gains, the NZ dollar had started clearly lifting from around 8pm.
ANZ bank said market sentiment had a "massive U-turn" overnight, following a few days where risk had been taken off the table.
"This is a remarkable turn of events after the theme of consolidation and paring of risk looked to be settling in," ANZ said.
Data released overnight was positive across the board, "but it may just come down to the simple fact that after a sell-off in many markets, investors saw it as a good level to step in. It has been one heck of a rollercoaster ride".
Risk appetites and US dollar sentiment remained the dominant forces in currency markets, and that did not look about to end any time soon, ANZ said.
The NZ dollar showed a similar pattern against the European and Japanese currencies as against the greenback, rising to 0.4954 euro at 8am from 0.4870 at 5pm, and up to 67.31 yen from 64.77.
But the kiwi has not recovered from a dive against the Australian dollar after the OCR announcement. From around A81c at 9am yesterday, the kiwi was down to A79.92c at 5pm and by today's local open had just managed to ease ahead to A80.19c.
The trade weighted index lifted to 66.05 at 8am from 64.75 at 5pm.
NZPA
