Investing.com - Coming off a 2012 gain of about 5.8 percent against its U.S. rival, the New Zealand is off to a stellar start to the news year as traders backed riskier currencies on the back of a resolution to the U.S. fiscal cliff during Wednesday's Asian session.
In Asian trading Wednesday, NZD/USD surged 1.09% to 0.8378. The pair is likely find resistance at 0.8388 and support at 0.8365.
Like AUD/USD, NZD/USD opened higher today on expectations that U.S. policymakers would finally get around to passing vital fiscal cliff legislation. While bullish for the most part, action in the riskier currencies was tempered somewhat as traders waited for the U.S. House of Representatives to act on a cliff resolution.
House Republicans were looking to attach more than USD300 billion in additional spending cuts to that measure despite Senate threats that the upper legislative body would accept changes to its bill. When it became clear changes to the Senate measure would not move through the House, the House instead voted on the Senate's version of the fiscal cliff bill.
Once it became evident the House had no choice but to pass the Senate bill, riskier currencies took off with NZD/USD rocketing from 0.8328 to 0.8380. The pair would later trade as high as 0.8388.
It is not all good news for New Zealand. The stronger kiwi is seen as crimping profit margins for New Zealand exporters, but it is hard to argue with the fact that NZD/USD has been in a steady uptrend since early 2012. In February 2012, the pair was trading around 0.5000.
Elsewhere, NZD/JPY surged 1.3% to 72.82 as the yen continued to weaken against most of the major currencies. EUR/NZD slipped 0.38% to 1.5864. AUD/NZD fell 0.49% to 1.2503.
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