Kiwi holds at 4-month high against USD on positive fundamentals

A recent strong run in the New Zealand dollar continued on Thursday, as fundamentals looked increasingly brighter for the New Zealand economy.

The NZD/USD pair traded up 0.66% at $0.6829 on Thursday afternoon in Wellington, rising from $0.6784 where the pair closed in New York on Wednesday, while touching a four-month high of $0.6846 earlier on Thursday.

Earlier today a measure of consumer sentiment pointed to a strong jump in confidence levels among New Zealanders this month. The ANZ Consumer Confidence Index rose 3.7% in October to 114.9 points from 110.8 in September, where a reading above 100 signals that the majority of consumers are positive, while a reading below zero indicates pessimism.

Higher confidence levels, and the New Zealand dollar's strong run, have partly come about as a result of the recent rebound in global dairy prices.

Dairy prices have risen sharply at the last four Global Dairy Trade (GDT) auctions and the New Zealand dollar has risen from a low of $0.62 against the greenback in September to its highest since the end of June in recent days.

On Wednesday the currency also gained support after Reserve Bank of New Zealand (RBNZ) Governor Graeme Wheeler gave a relatively hawkish speech. The NZD/USD pair finished the session around 2% higher.

Third-quarter inflation figures due on Friday may argue for a rate cut from the RBNZ as soon as this month though, with markets expecting the annual change in the CPI to come in around 0.3%, far off the RBNZ's 2% target midpoint.