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NZ dollar follows Wall Street higher

08:00 AEST Mon Jul 16 2012
AAP
The New Zealand dollar is on the up (ThinkStock)
The New Zealand dollar is on the up (ThinkStock)

The New Zealand dollar gained as investors were more upbeat after better-than-expected second-quarter earnings from investment bank JPMorgan & Chase, stoking appetite for higher-yielding assets.

The New Zealand dollar rose to 79.67 US cents just before 8am up from 79.51 cents at the close of trading in New York.

The kiwi rose as high as 65.11 euro cents, a record high since the single currency entered circulation in 2002, trading at 64.96 cents at 8am up from 64.87 cents.

The Standard & Poor's 500 Index rose 1.7 per cent on the JPMorgan result, while the Dow Jones Industrial gained 1.6 per cent. The Thomson Reuters/Jefferies CRB Index, which measures the price of 19 raw materials, rose 1.3 per cent.

"Financial markets ended the week on a high," said Mike Jones, market strategist at Bank of New Zealand.

"Indicators of risk aversion eased, commodity prices rallied, and bond yields inched off their lows," lifting demand for assets including the kiwi dollar.

Investors will be looking to US Federal Reserve chairman Ben Bernanke's testimony to the House of Representatives on Tuesday and Wednesday for any clues about the potential and timing for further easing to lift the pace of growth.

"Every man and their dog have their hopes pinned on Fed easing," Mr Jones said.

The New Zealand dollar rose to 77.79 Australian cents from 77.66 cents at the close of trading in New York and gained to 63.17 yen from 62.93 yen.

The trade weighted index was little changed at 72.39 from 72.35.