Yesterday's surprisingly hawkish Monetary Policy Statement was overshadowed by the US dollar's continued recovery in local New Zealand dollar trade today.
The kiwi opened at its high for the session of US71.14c and closed at its low of US70.71c compared with US$71.17c at 5pm yesterday.
The kiwi was given fresh impetus yesterday when Reserve Bank Governor Allan Bollard left the Official Cash Rate unchanged at 6.5 per cent but left the door ajar for interest rate hikes next year.
However, BNZ currency strategist Sue Trinh said: "at the moment there's a much bigger dynamic going on and that's really the US dollar".
She said the greenback had regained momentum right across the board in recent days.
The US dollar's recovery had seen the euro weaken and that had dragged the aussie and kiwi with it.
At 5pm in Wellington, the US dollar was buying 105.27 yen (104.27 yen) and the euro was trading at US$1.3239 (US$1.3298).
Meanwhile the kiwi traded sideways on most of the crosses buying A93.96c at 5pm today after gaining about 100 points yesterday to close at A94.04c.
On the other crosses the kiwi was at 0.5341 euro (0.5353 euro at 5pm yesterday), 36.87 British pence (36.91), 75.26 yen (74.22) and 0.8165 Swiss francs (0.8204).
The aussie was buying US75.26c (US75.70c last night).
The trade-weighted index was at 68.90 (69.11) and the monetary conditions index was at plus 908 (928).
On the money markets, 90-day bank bill yields were at 6.71 per cent (6.72), February 2006 bonds were on 6.28 per cent (6.28). The July 2009s were at 6.02 per cent (6.00) and April 2013s were at 6.00 per cent (5.98).
- NZPA
<EM>Currency:</EM> Greenback's recovery overtakes mps effect in kiwi trade
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