NZ dollar jumps to six-month high
9:45 AM Tuesday Jul 27, 2010

The New Zealand dollar climbed to a six-month high as a surge in new home sales in the US stoked investors' appetite for higher-yielding, or riskier, assets.

American new home sales jumped 24 per cent last month, taking the inventory of unsold homes to its lowest level in 40 years. Stocks on Wall Street gained on the news as investors eschewed so-called safe havens such as the greenback, and the Dollar Index dropped 0.5 per cent to 82.05.

The kiwi climbed to its highest point against the greenback since January, and will likely hold on to its gains ahead of the official cash rate review on Thursday, which is expected to see the Reserve Bank hike by a quarter-point to 3 per cent.

"The US housing data was a pretty staggering bounce, though you've got to remember it comes from a very low base," said Tim Kelleher, vice president of institutional banking and markets at Commonwealth Bank of Australia.

"I can't see the kiwi getting any weaker before Thursday - Bollard's still hiking, and while a 3 per cent yield's not amazing, it's better than 0 per cent."

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