By Rob Samson

The New Zealand Dollar (NZD) rose to fresh highs against the USD on Tuesday after strong business confidence data from New Zealand.

The pound sterling vs New Zealand dollar exchange rate (GBP/NZD) is trading 0.04 pct lower at 19559; this represents a decent intra-day recovery for the GBP which has seen significant pressure being exerted by the NZD and other major currencies over the course of the past 24 hours.

The EUR/NZD is 0.3 pct lower at 16280 while the NZD/USD is 0.3 pct higher at 0.8403.

(NB: Our NZD quotes are taken from the spot markets; your bank will subtract a discretionary spread when passing on their retail rate. However, an independent FX provider will guarantee to undercut your bank's offer and deliver you up to 5% more currency. Please learn more here.)

The New Zealand dollar also rose against the Euro as strong business confidence, increased consumer spending and rising property values fuel expectations the Reserve Bank will hike interest rates.

NZ dollar driven higher by business confidence figures

The catalyst for the latest advance in the NZ dollar was a set of business confidence figures which showed business confidence to be at a 20-year high.

The upbeat data supported the Reserve Bank's plans to lift interest rates this year, and traders are betting the official cash rate will rise 118 basis points over the coming 12 months.

"The NZD has jumped this morning after very strong business confidence data. AUD/NZD is back below 1.0800 and those trying to pick a top in the NZD are having a tough time of it," says Sean Lee at FXWW.

Lee reckons the NZD/USD will run into some solid technical resistance near .8415 (see chart) prior daily highs.

"There are plenty of reasons to be reasonably bullish the kiwi at the moment," said Dan Bell, head of corporate sales at HiFX in Auckland. "We're going to have one of the only central banks in the world raising rates."

US dollar mixed

Elsewhere on the foreign exchange rate markets we note that the U.S. dollar put in a mixed performance overnight but generally held within familiar territory against major rivals.

The dollar has suffered a somewhat heavier tone this week following last Friday’s disappointing payrolls report for December.

The much slower than expected pace of jobs growth raised doubts about a steady reduction in Fed monetary stimulus over the coming months.

Investors will turn their focus onto today’s retail sales data for December.

Further signs of weakness in the recovery could add to questions about the outlook for continued Fed tapering and weigh on the dollar.