Currency: Kiwi trades above US44c

The New Zealand dollar maintained its strength today and gained on the Australian dollar after recovering almost 3/4 of a US cent from its overnight lows.

At 5pm the kiwi had risen to US44.14c from yesterday's close of US43.70c, while the aussie climbed to US53.10c from yesterday's US52.76c close.

The kiwi-aussie cross climbed above the key A83c level during the day to close at A83.05c (from A82.83c yesterday), triggering some large buying mid-afternoon, Bank of New Zealand forex manager Greg Ball said.

"We've been as high as US44.15c, that was the high today and there was a low last night of US43.47c, so we're talking a good 3/4 of a cent move on the day.

"Initially the strength was on the back of a weaker US dollar in New York, but today we've seen a reasonably sizeable kiwi-aussie flow go through. It quite possibly was targeting stop-losses above the A83c level," Mr Ball said.

Traders who had expected the kiwi to fall had placed those buy orders to limit their losses should the currency move contrary to their expectations.

"That's probably been the biggest mover on the day and the key to the currency flow. It was a local bank buying the kiwi against the aussie - we suggest that it was an offshore investor, or perhaps an investor with a model fund, because that A83c level was pretty key."

Mr Ball said the kiwi had settled within a new range of US43.50c and US44.50c.

"I don't suspect that there were will be too much outside of those ranges tonight - my call would be a move higher first up."

Overnight the greenback received a hammering after the Conference Board, a private New York-based business research group, said its monthly index of US consumer confidence fell to 114.3 in August, its lowest since April.

The decline in US consumer confidence prompted a reversal of the euro's earlier losses. Market observers said any tightening of the US consumers' spending habits could bode ill for economic growth.

In Wellington, the euro was buying US91.26c at 5pm from US90.89c yesterday.

Across the Tasman, Australia recorded its lowest current account deficit for two decades in the three months ending June 30, driven by an improved trade surplus flowing from the low Australian dollar, a report said today.

The deficit is now down to just 2.05 percent of gross domestic product (GDP), compared with more than 5 percent of GDP in the mid-1990s.

On the other crosses the kiwi was buying 52.93 yen (52.59 at yesterday's close), 30.40 pence (30.31), 0.9455 marks (0.9405), 0.7335 Swiss francs (0.7395), and 0.4835 euros (0.4808).

The aussie was buying $NZ1.2031 from $NZ1.2074 yesterday.

The trade-weighted index was at 51.78 (51.46), 90-day bills were slightly lower at 5.84 percent (5.85 percent) and the monetary conditions index firmed to minus 602 (minus 634).

On the bond market, the March 2002s were at 5.68 percent (5.70 percent), the April 2004s were at 6.10 percent (6.15), the November 2006s were at 6.30 percent (6.35), and the November 2011s were at 6.46 percent (6.51).

- NZPA