Kiwi up in Asia as US dollar out of favour

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NZN

The New Zealand dollar rose in Asian trading today as risk appetite remained strong and the US dollar remains out of favour, further weighed by weaker-than-expected jobs data overnight Friday.

A mixture of New Zealand Bank notes and coins.

New Zealand currency (file picture).

Source: istock.com

The local currency traded at US71.78c as at 5pm in Wellington versus 71.63c as at 8am in Wellington and 71.67c on Friday in New York.

The US dollar has struggled to gain traction so far this year and came under further pressure when data on Friday showed the world's biggest economy added 148,000 jobs in December, missing expectations.

Martin Rudings, senior dealer foreign exchange at OMF in Wellington, said, however, the greenback's weakness is puzzling, given the tax package and expectations for further rate increases in the US.

He noted that trading is very light, which increases volatility.

Meanwhile, the kiwi may come under some pressure as it looks like the Thomson Reuters core commodity CRB Index "might have topped out on Friday when it gapped lower after quite a few increases took it too new highs. It looks like a reversal could be in play", he said.

Both the NZ and Australian dollars have benefited from rising commodity prices in recent sessions, with the Aussie just below a three month high against the greenback and the kiwi up around 2 per cent against the US dollar since just before the Christmas holiday.

While Asia have overlooked the possible slide in commodity prices, there could be some impact in London or New York, said Mr Rudings. 

"I think it's a warning sign''.

The local currency traded at 81.24 yen versus 81 yen Friday and at 4.6569 Chinese yuan from 4.6470 Chinese yuan and rose to A91.43c from 91.21c on Friday. It traded at 59.65 euro cents from 59.55c and at 52.91 British pence from 52.78 pence.

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