Kiwi sidesteps bailout woes

10.52 NZST, Wednesday 27 March 2013

Kiwi sidesteps bailout woes
By Andrew May (Sales Trader, CMC Markets New Zealand)

It seems there's life in the Kiwi as risk sentiment grabs the bull by the horns right before the Easter break encroaches. For the vast majority of March, and in the face of the Cypriot bailout, the NZDUSD has languished side-saddle, trading a tight 82.10–82.65 range and avoiding any decently severe risk range based pull backs.

Yet risk appetite and attraction of safe haven commodity currencies such as the CAD and AUD have seen a valiant push to the upside. Institutional investors and global central banks are among the bulls tugging the Kiwi's collar to within US 84c as they seek alternate investments to the Euro which could witness a flight to banks if this Cypriot contagion is not contained. The NZDEUR has relished at 65.24 as immense selling pressure attacks the single European currency.

On the back of positive US market optimism, which was not dampened by offbeat consumer confidence numbers (59.6 vs 67.5), saw the S&P500 close this morning’s trade within 2pts of its 2007 historic high. Thanks to a decent durable goods figure overnight (5.7% vs 3.9%), the NZDUSD breached 83.90 this morning and was seen to hold on to its gains as dairy giant Fonterra increased its milk payout forecast by 15c.

Expect the Kiwi to continue to flourish, tempting the risk bulls to over US 84c and compromising e65.50, thanks to a NZD $414mio trade surplus providing rocket fuel yesterday, US GDP still to hit the headlines late this week, and the beleaguered Euro fighting a battle on many fronts.

http://www.cmcmarkets.com/

© Scoop Media