WELLINGTON: The New Zealand dollar advanced as the greenback weakened on reports US president Barack Obama raised concerns about the strength of the US dollar during the Group of Seven summit in Germany.
The kiwi rose to 71.41 US cents at 8am in Wellington, from 70.50 cents at 5pm on Monday. The trade-weighted index gained to 74.78 from 74.21.
The US dollar index fell after media reports citing a French diplomatic source said that President Obama had told people at the G-7 summit in southern Germany that the strong dollar is a problem. The White House later denied the reports.
A stronger currency weighs on the competitiveness of industries and exports.
“These reports were denied by the US government, because they would never publicly stray away from paying lip service to their strong dollar policy but in reality the rising dollar is a problem for the Federal Reserve,” said BK Asset Management’s Kathy Lien.
The kiwi may also be gaining support as some traders get “cold feet” ahead of this Thursday’s Reserve Bank meeting where markets are split on whether New Zealand’s 3.5 per cent benchmark interest rate will be cut, said BNZ’s Kymberly Martin.
First quarter manufacturing data for NZ is due for release, as well as the Crown financial statements for the 10 months through April and the latest monthly housing data for May from state valuer Quotable Value.
In Australia, the focus will be on the release of the NAB business confidence survey for May. The New Zealand dollar edged up to 92.67 Australian cents from 92.60 cents.
