NZ dollar surges above 72 US cts
NZ dollar surges above 72 US cts amid better data, earnings; stress tests loom
By Paul McBeth
July 23 (BusinessDesk) – The New Zealand surged above 72 U.S. cents as better-than-expected data in the U.S. and Europe stoked investors’ confidence in the global economy, while American companies keep releasing strong earnings for the second quarter.
Stocks on Wall Street and in Europe gained as U.S. housing data and British retail sales beat analysts’ forecasts, eroding some of the pessimism that’s been plaguing markets in recent weeks. More strong Q2 earnings from U.S. companies, such as United Parcel Service Inc. and Caterpillar Inc., added to the upbeat tone, and the Standard & Poor’s 500 Index jumped 2.3%. European banking regulators set the upbeat outlook for the London and New York trading sessions, bringing forward the release of stress test results for the region’s lenders to let Europe markets take in the news before the close of the week.
The change in the stress test release “is clearly a positive – it all kicked off from there and the market’s expecting good things,” said Imre Speizer, market strategist at Westpac Banking Corp. “There’s a chance the kiwi will look to go up and test 73 U.S. cents, but I wouldn’t expect to see that break.”
The kiwi jumped to 72.42 U.S. cents from 71.86 cents yesterday, and climbed to 67.88 on the trade-weighted index of major trading partners’ currencies from 67.56. It fell to 81.06 Australian cents from 81.22 cents yesterday, and rose to 62.90 yen from 62.28 yen. It edged up to 56.16 euro cents from 56.00 cents yesterday, and gained to 47.43 pence from 47.04 pence.
Speizer said the currency may trade between 72 U.S. cents and 73 cents today as investors remain upbeat about the global economic outlook ahead of the stress test results, which have been brought forward to a 6am GMT release from 4pm GMT.
Federal Reserve chairman Ben Bernanke gave optimism a fillip as he continued his testimony on monetary policy, and said the central bank had already considered cutting interest rates on excess reserves.
With little on the domestic calendar, investors will be turning to the Northern Hemisphere for news as U.S. earnings season continues to beat expectations, and British second-quarter gross domestic product holding some room for a surprise on the upside.
(BusinessDesk)