Reuters New Zealand

NZ dollar rebounds as U.S. growth spurs risk demand

Friday October 30, 09:36 AM

WELLINGTON, Oct 30 (Reuters) - The New Zealand dollar rebounded from near one-month lows on Friday as a return to growth in the United States renewed appetite for risk.

* Kiwi NZD=D4 resumes around $0.7330/40 after hitting a low of $0.7163 in the aftermath of the Reserve Bank of NZ's statement which showed no hurry to raise rates.

* U.S. dollar falls after data shows the U.S. 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. For more see [ID:nN29354547]

* The safe-haven attraction of the U.S. dollar and the yen diminished by the data and sparked demand for high yield currencies such as the kiwi and the Aussie, which both gained more than 2 percent.

* RBNZ statement dampened market enthusiasm for rate hikes as early as January, but a March rise remains almost fully priced in despite the central bank saying it expects to keep cash rate at 2.5 percent until the second half of 2010. Reuters poll shows analysts favour first rise in second quarter. [NZ/POLL]

* Kiwi has recouped some of the ground lost from earlier profit-taking. Support seen at $0.7290 with initial resistance around $0.7370 ahead of a move towards $0.7400.

* Kiwi reasonably steady against the Aussie NZDAUD=R but does a sharp u-turn against the yen NZDJPY=R as risk goes back on the table.

* NZ bonds weaken in line with U.S. Treasuries after growth data and disappointing note auction as well as a rebound in stocks. Local yields up to 4 basis points higher.

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