NZ dollar higher as oil prices improve

The New Zealand dollar touched its highest level in almost two weeks as a gain in oil lifted sentiment for commodity currencies.

The kiwi touched 69.25USc and was trading at 69.13USc at 8am in Wellington, from 68.82USc at 5pm yesterday. The trade-weighted index rose to 72.75 from 72.51 yesterday.

Oil prices rose after the Interfax news agency reported Saudi Arabia and Russia reached a consensus on an output freeze, citing an unidentified "informed diplomatic source" in Doha, and that Saudi Arabia will make a final decision regardless of Iran's position. Oil producers are set to meet in Doha on April 17 to discuss freezing output to stabilise an oversupplied oil market. That improved investor sentiment and bolstered demand for currencies linked to commodities.

"Global commodity prices were generally stronger overnight," Bank of New Zealand senior market strategist Kymberly Martin said in a note. "This helped support performance of 'commodity-linked' currencies including the New Zealand dollar and Australian dollar."

Today, economists are awaiting the release of March food prices, the final piece of data that could influence their expectations for first-quarter inflation, which is due out Monday.

BNZ expects annual inflation of 0.3%, below the Reserve Bank's 0.4% forecast. Weak inflation could prompt traders to increase their bets for an interest rate cut this month, which is currently seen as a 40% chance, Martin said.

Elsewhere, Australia has a report due on consumer sentiment, China publishes trade data, Europe has industrial production and the US has retail sales.

The New Zealand dollar slipped to 89.99Ac from 90.10Ac yesterday. It advanced to 60.67 euro cents from 60.32 cents, gained to 48.44 British pence from 48.31 pence, rose to 74.97 yen from 74.48 yen and increased to 4.4685 yuan from 4.4502 yuan.

(BusinessDesk)

Tina Morrison
Wed, 13 Apr 2016

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NZ dollar higher as oil prices improve