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NZ dollar retreats from 2-wk highs; debt mixed
Reuters - 2 hours 47 minutes ago
WELLINGTON, Dec 9 - The New Zealand dollar <NZD=> cooled from near two-week highs on Tuesday as Asian stocks struggled to follow a strong lead from Wall Street.
The kiwi had touched a high of $0.5490 in offshore trade, its highest since Nov. 28, riding a rally in U.S. shares on optimism arising from a rescue package for the U.S. car industry and a stimulus plan from U.S. president-elect Barack Obama.
Firmer stock markets are widely viewed as a positive cue for the high-yielding kiwi because they point to investors being in risk-seeking mode.
"Should we see further gains in global equities over the next few days, the NZ dollar has the potential to be squeezed back up towards 56 U.S. cents," said Bank of NZ currency strategist Danica Hampton.
At 0400 GMT, the kiwi was at $0.5413/19 compared with $0.5322/28 in late local trade on Monday. It traded a local range of $0.5419 to $0.5479 range.
The kiwi came off the boil somewhat in local trade as Asian stocks put in a mixed showing and the neighbouring Aussie dollar eased after a gloomy business report highlighted the difficulties facing the Australian economy.
Investors were keeping an eye out for a speech by Reserve Bank of Australia Governor Glenn Stevens at 0925 GMT for any clues he might give on future interest rate moves.
New Zealand's newly-elected centre-right government said it would make growth and lifting the economy out of recession its priority as it unveiled its policy programme at the opening of the parliament.
It confirmed election promises of income tax cuts over the next three years totalling NZ$4.4 billion, as well as spending on infrastructure to stimulate the economy. See: [nWEL373627]
The government said it would have a deficit this year and expected to do for some time to come. The Treasury said updated economic and fiscal forecasts would be issued on Dec. 18.
New Zealand bonds were mixed as firmer stocks dimmed the safe-haven appeal of debt. Short and medium-term yields lost ground with yields up to 10 basis points higher.
However, the yield on the benchmark 10-year bond <NZ10YT=RR>, which moves inversely to its price, gained a late bid tone to close at 4.77 percent.
The NZ Debt Management Office said it would cancel the scheduled bond tender for Dec. 18, the day it would issue updated forecasts. The last tender of the year will be the Dec. 11 offer of NZ$150 million of three maturities.
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