The New Zealand dollar eased back from its hefty rally last week, closing lower in mild trade yesterday as profit-takers moved in.
The kiwi finished at 42.74USc after shifting within a moderate 20-point range.
A currency dealer said a raft of economic data this week was likely to have only a muted effect, all the more so as the holiday season got into full swing.
However, he said the kiwi regained its underlying bid tone yesterday.
"We had that very good day on Friday - and the market liked the kiwi most of the week," the dealer said, in reference to a reduction in gloom over the horrendous size of the current account deficit.
The deficit is a broad measure of the difference between what the country earns and spends overseas.
He added that, while the kiwi's erstwhile travelling companion the euro rose latterly, the Australasian currencies fell victim to those wishing to lock in last week's gains.
The kiwi's losses were overdone, however, and the local dollar eventually recovered.
"The underlying bid tone has continued," the dealer said. But the unit still faced resistance around 43.10-43.20c
The dealer said, however, a break of that level would see momentum traders back in action, driving the unit higher - maybe to 45USc.
The currency got a bit more good news last night as the WestpacTrust McDermott Miller confidence index had its biggest ever quarterly jump in the current December period, shunting it firmly into positive territory.
Among data due over the week is this afternoon's Government December economic and fiscal update and budget policy statement.
Third-quarter gross domestic product figures will be out on Thursday and November trade and retail numbers will also be published this week.
As well as digesting all that - likely to result in an overall slightly positive bias for the currency, according to the dealer - the market has a nervous eye on what will happen to global interest rates early next year.
In that regard, the biggest news this week is likely to be tomorrow's (NZT) result from America's Federal Reserve, which meets to decide whether to change interest rates.
Few expect any change but rather see the Fed shifting to an easing bias in the light of signs of a slowing in the juggernaut US economy.
- NZPA
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