The New Zealand dollar powered higher overnight to a new post float high on the Trade Weighted Index (TWI) basis.
It hit 77.23 at about 10pm last night (February 14, 2013) before settling back to 76.94 at about 6 am this morning.
The US dollar gained in strength against most currencies except the NZ dollar.
US jobless claims fell more than was expected.
The NZ dollar made continuing gains against the British pound, the Aussie dollar and the euro. Yesterday's strong PMI probably helped buoy sentiment.
Gold has fallen to US$1,635/ounce, NZ$1,930/ounce. US benchmark oil prices recovered somewhat to just over US$97/bbl, a level they have been at for the past two weeks.
Platitudes from the G7 and the IMF on currencies and the 'currency war' probably convinced markets no-one is seriously looking at the issue.
The TWI is a weighted basket of five currencies (last weighted in December 2012), as follows:
| weighting | 11:10am | 10pm | 6am | |
| Jul 24, 07* | Feb 14, 13 | Feb 15, 13 | ||
| USD | 29.9% | 0.8064 | 0.8503 | 0.8468 |
| EUR | 26.7% | 0.5843 | 0.6366 | 0.6352 |
| AUD | 22.3% | 0.9134 | 0.8202 | 0.8185 |
| JPY | 14.8% | 97.620 | 79.525 | 78.850 |
| GBP | 6.3% | 0.3917 | .5483 | 0.5466 |
| TWI | 100.0% | 76.88* | 77.23 | 76.94 |
* Note that the trade weights were different in 2007.
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4 Comments
External confidence in NZ econ being high is one story.
The speed of new $$ pumped into econ in other countries being much much faster than NZ does is the other story.
Japanese adds money into flow; Chinese adds money into flow; USA is thinking about 4th round QE. How close is NZ's captal markets with these countries?
I'd say pretty close. A small spill over from those giants will have big impacts on NZ's tiny econ.
Any ways to combat that? Of course! Targeted capital control!!!
in housing, in farm land. the first is pretty much a driver for domestic econ while the latter is a key input to NZ's 70% of export.
Aim for them. You cannot be wrong.
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