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NZ dollar consolidates, risky assets back in vogue
Friday October 30, 01:39 PM
WELLINGTON, Oct 30 (Reuters) - The New Zealand dollar rallied from one-month lows and steadied on Friday near $0.73 as a resurgent U.S. economy and rising U.S. profits renewed investor appetite for high-yield currencies and other riskier assets.
* Kiwi NZD=D4 hovers around $0.7287/93 after hitting a low of $0.7163 in the aftermath of the Reserve Bank of New Zealand's statement on Thursday which showed no hurry to raise rates.
* It recovered to an offshore high of $0.7330 as risk appetite returned after data showed the U.S. economy grew at a 3.5 percent annual rate in the September quarter, snapping four down quarters and exceeding forecasts. See [ID:nN29354547]
* The safe-haven attraction of the U.S. dollar and the yen diminished and investors went hunting for high yielders.
* Kiwi slips against the Aussie NZDAUD=R as the Reserve Bank of Australia is expected to raise rates by 25 basis points early next week, further widening rate differentials with NZ.
* Kiwi fell on Thursday after the New Zealand central bank's statement dampened market enthusiasm for rate hikes as early as January. But a March rise remains almost fully priced in despite the bank saying it expects to keep rate at 2.5 percent until the second half of 2010. A Reuters poll shows that analysts are in favour of a hike in the second quarter. [NZ/POLL]
* Kiwi firm against the yen NZDJPY=R and the euro NZDEUR=R, sending the trade-weighted index =NZD up almost 1 percent.
* Support for kiwi seen at $0.7230 with initial resistance around $0.7370 ahead of a move towards $0.7400.
* Swaps recouped some losses, while NZ bonds weaken in line with U.S. Treasuries. Local yields up to 6 basis points higher.
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