NZ dollar strengthens

new zealand dollar3The New Zealand dollar rose to the highest in almost two months overnight although increased tensions in the Middle East eroded risk appetite.

Upbeat Federal Reserve minutes and stronger US core inflation helped the greenback.

The kiwi traded at US73.53c as at 8am in Wellington, having risen to as high as 73.78c overnight, from 73.46c late Wednesday. The trade-weighted index edged up to 75.32 from 75.28.

Middle East tensions have been stoked by US President Donald Trump’s tweet that US missiles “will be coming” to Syria in retaliation for the alleged use of chemical weapons to attack rebel positions and urged Russia not to support the “gas-killing animal” Syrian President Bashar al-Assad.

Russia has said it will shoot down any missiles that put its positions under threat.

Crude oil rose on the war talk.

Meanwhile, minutes of the last Fed policy meeting show all policymakers saw the US economy strengthening and inflation picking up.

That comes as data showed core CPI rose 2.1 per cent year-on-year in March, as expected, and the fastest pace since February last year.

“Geopolitical tensions in the Middle East have capped risk appetite and helped push up oil prices to new 3-year highs,” traders at HiFX said in a note.

In New Zealand on Thursday the focus will be on a speech by Reserve Bank assistant governor McDermott on inflation targeting.

It comes ahead of first-quarter inflation data due next week, which is expected to show pricing pressures remain soft.

The kiwi fell to 4.6076 yuan from 4.6144 yuan late Wednesday. It was little changed at 94.79 Australian cents from 94.76c and rose to 51.87 British pence from 51.79 pence. The kiwi traded at 59.48 euro cents from 59.40c and traded at 78.57 yen from 78.62 yen.

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