Kiwi gains on 'reflation' talk

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NZN

The New Zealand dollar has risen after stronger-than-expected US inflation figures stoked talk of global "reflation" which will hasten central bank moves to tighten monetary policy.

New New Zealand 10 dollar and 5 dollar notes and coins.

New Zealand currency (file picture).

Source: istock.com

The kiwi advanced to US72.08 cents as at 8am today in Wellington from US71.73c late yesterday.

The trade-weighted index rose to 78.49 from 78.11.

The US consumers price index rose 2.5 per cent in the 12 months through January, the biggest year-on-year gain since March 2012, and faster than economists were expecting.

Other figures showed retail sales rose 0.4 per cent last month, four times faster than expected.

US stocks rose and bond yields gained after the data.

"Ultimately the pressure for higher rates is expected to remain in the face of the global reflation trade and signs that the NZ economy is going down a similar path," said BNZ currency strategist Jason Wong.

"The global reflation trade continued on the release of strong US CPI and retail sales data."

Today, traders will be watching for the ANZ consumer confidence report for February, a speech by Finance Minister Steven Joyce and the Crown accounts for the last six months of 2016.

In the morning, the kiwi rose to 57.88 British pence from 57.52p and gained to 68.07 euro cents from 67.74 cents.

It rose to 93.60 Australian cents from A93.42c and gained to 82.33 yen from 81.96 yen. The kiwi rose to 4.9494 yuan from 4.9233 yuan.

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