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NZ Dollar Rises Amid Rising Risk Appetite

The New Zealand dollar strengthened against other major currencies in the Asian session on Monday, as most Asian stock markets traded in positive territory despite the mixed cues from Wall Street on Friday. News that French President Emmanuel Macron's party won a clear parliamentary majority at the weekend, boosted investor sentiment.

The result gives the 39-year-old president a strong mandate in parliament to pursue his pro-EU, business friendly reform plans. Investors also await the formal start of Brexit talks between the UK and the European Union later in the day.

In other economic news, data from Business NZ showed that New Zealand's service sector activity expanded faster in May. The performance of services index, or PSI, climbed to 58.8 in May from 53.2 in April.

Last Friday, the NZ dollar showed mixed trading against its majors rivals. While the kiwi rose against the yen, it held steady against the U.S. dollar, the euro, and the Australian dollar.

In the Asian trading the NZ dollar rose to more than a 3-1/2-month high of 81.02 against the yen and nearly a 2-month high of 1.5341 against the euro, from Friday's closing quotes of 80.35 and 1.5439, respectively. If the kiwi extends its uptrend, it is likely to find resistance around 83.00 against the yen, and 1.49 against the euro.

Against the U.S. and the Australian dollars, the kiwi advanced to a 5-day high of 0.7298 and a 4-day high of 1.0447 from last week's closing quotes of 0.7247 and 1.0506, respectively. The kiwi may test resistance near 0.74 against the greenback, and 1.03 against the aussie.

Meanwhile, the safe-haven yen fell against other major currencies.

In economic news, the Ministry of Finance said that Japan posted a merchandise trade deficit of 203.367 billion yen in May. That missed forecasts of a surplus of 43.3 billion yen following the 481.1 billion yen surplus in April.

Exports were up 14.9 percent on year to 5.851 trillion yen, shy of expectations of a gain of 16.0 percent. Imports climbed an annual 17.8 percent to 6.054 trillion yen versus the estimate of 14.5 percent.

The yen fell to 141.97 against the pound from an early 4-day high of 141.33. The currency may test support near the 145.00 region.

Against the euro, the U.S. dollar and the Swiss franc, the yen dropped to 124.39, 111.14, and 114.09 from Friday's closing quotes of 124.12, 110.86, and 113.80, respectively. If the yen continues its downtrend, it may find support around 126.00 against the euro, 113.00 against the greenback, and 116.00 against the franc.

Looking ahead, Eurozone construction output for April is due to be released at 5:00 am ET.

At 8:00 am ET, Federal Reserve Bank of New York President William Dudley is expected to speak at the North Country Chamber of Commerce, in Plattsburgh.

At 11:00 am ET, German Bundesbank President Jens Weidmann is expected to speak at the Colloquium in memoriam Prof Dr Hans Tietmeyer, in Frankfurt.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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