NZ dollar climbs above 62 euro cents on Chinese trade data

NZ dollar climbs above 62 euro cents as Chinese trade data stokes risk appetite

By Paul McBeth

Jan. 10 (BusinessDesk) – The New Zealand dollar climbed above 62 euro cents as a bigger-than-expected Chinese trade surplus stoked investors’ appetite for riskier, or higher-yielding, assets.

The climbed as high as 62.13 euro cents, the highest since the single currency was issued in 2002, and traded at 62.10 cents at 5pm from 61.66 cents at 8am and 61.43 cents yesterday. It rose to 79.31 US cents from 78.55 cents at 8am and 77.86 cents yesterday. It climbed as high as 79.39 US cents, a two-month high.

A bigger-than-expected Chinese trade surplus of US$16.52 billion in December in China stoked investors to seek so-called risk-sensitive assets, amid fears Europe’s burgeoning sovereign debt crisis might weigh on the world’s second biggest economy. Investor sentiment was given a fillip after a meeting between European French President Nicolas Sarkozy and German chancellor Angela Merkel to flesh out the regional austerity programme agreed to by most European nations last month. That saw the kiwi rise to a decade-high against the euro.

“In a risk-on environment, the kiwi and Aussie generally outperform,” said Alex Hill, senior currency strategist at HiFX in Auckland, referring to the trans-Tasman currencies colloquially. “The question now is what will be the catalyst for the next risk-off event, and that could be something to do with a credit rating agency announcement due to Germany or France.”

Rating agency Standard & Poor’s put euro-zone nations on notice before the Dec. 2 summit where members agreed to closer economic integration in return for bigger roles for the regional powerhouse economies Germany and France, and still hasn’t delivered a final edict on the deal yet. France was singled out as potentially facing a downgrade of two notches.

HiFX’s Hill said the market is expecting some kind of resolution either way in the first quarter of the year, though it could come at any time.

He expects the kiwi dollar will continue its trend of slow gains followed by sharp declines through the early part of this year as currency markets continue to face volatility with Europe weighing on the global economy.

Investors largely ignored local data, with no noticeable movement in the currency. New Zealand’s building consents showed approvals dwindled in November, led by a downturn in South Island approvals, while Quotable Value showed property values extended gain in December, and are sitting 3.5 percent below the peak in late 2007.

The kiwi rose to 77.03 Australian cents from 76.66 cents yesterday, and gained to 60.92 yen from 59.93. It climbed to 51.26 British pence from 50.59 pence yesterday, and advanced to 70.97 on the trade-weighted index form 70.11.

(BusinessDesk)

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