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NZ dollar consolidates, risky assets back in vogue

Published: 29 Oct 2009 19:42:27 PST

WELLINGTON, Oct 30 - The New Zealand dollar rallied from one-month lows and steadied on Friday near $0.73 as a resurgent U.S. economy and rising U.S. profits renewed investor appetite for high-yield currencies and other riskier assets.

* Kiwi <NZD=D4> hovers around $0.7287/93 after hitting a low of $0.7163 in the aftermath of the Reserve Bank of New Zealand's statement on Thursday which showed no hurry to raise rates.

* It recovered to an offshore high of $0.7330 as risk appetite returned after data showed the U.S. economy grew at a 3.5 percent annual rate in the September quarter, snapping four down quarters and exceeding forecasts. See [ID:nN29354547]

* The safe-haven attraction of the U.S. dollar and the yen diminished and investors went hunting for high yielders.

* Kiwi slips against the Aussie <NZDAUD=R> as the Reserve Bank of Australia is expected to raise rates by 25 basis points early next week, further widening rate differentials with NZ.

* Kiwi fell on Thursday after the New Zealand central bank's statement dampened market enthusiasm for rate hikes as early as January. But a March rise remains almost fully priced in despite the bank saying it expects to keep rate at 2.5 percent until the second half of 2010. A Reuters poll shows that analysts are in favour of a hike in the second quarter. [NZ/POLL]

* Kiwi firm against the yen <NZDJPY=R> and the euro <NZDEUR=R>, sending the trade-weighted index <=NZD> up almost 1 percent.

* Support for kiwi seen at $0.7230 with initial resistance around $0.7370 ahead of a move towards $0.7400.

* Swaps recouped some losses, while NZ bonds weaken in line with U.S. Treasuries. Local yields up to 6 basis points higher. -------------(30 October 2009 13:10 / 10 GMT)-------------

(Last prices as at 6pm NZ time the previous day) 90-DAY LIVE 2.79 (2.79) NOV-2011 4.350 (4.340) 90-DAY (DEC) 97.17 (97.17) APR-2013 5.205 (5.140) 90-DAY (MAR) 96.87 (96.86) DEC-2017 5.770 (5.735) 90-DAY (JUN) 95.99 (96.02) MAY-2021 6.060 (6.030) RBNZ MCI 264 (215) US 10YR BOND 3.503 (3.411) NZD TWI 65.47 (64.83) AU 10YR BOND 5.675 (5.588) NZD/USD 0.7285(0.7181) NZ/US 10YR SPD +227bp(+232bp) NZD/AUD 0.7972(0.7992) NZ/AU 10YR SPD +9bp (+15bp) NZD/EUR 0.4911(0.4877) NZ 2YR SWAP 4.530 (4.510) NZD/JPY 66.58 (64.81) NZ 5YR SWAP 5.710 (5.710) --------------------------------------------------------------- - (