KEY POINTS:
The New Zealand dollar moved slightly higher today against a general backdrop of US dollar weakness and ahead of an interest rate review here tomorrow.
By 5pm today the New Zealand dollar was buying US79.92c, up from the US79.63c at 8am and the US79.43c level at 5pm yesterday.
Hawkish comments from European Central Bank (ECB) officials sent to euro to a new post-launch high of 1.6020 against the greenback overnight amid expectations the ECB's next move may be a hike in interest rates.
ANZ said it was a case of strength by default for the New Zealand dollar.
"A backdrop of US dollar weakness and looming Reserve Bank of New Zealand (RBNZ) official cash rate review means many are reluctant to partake in trading the New Zealand dollar," ANZ said.
But the announcement of a new $400m two-year Uridashi bond helped New Zealand dollar sentiment.
"Despite clear signs the New Zealand economy is slowing, still prevalent inflation pressures mean we are unlikely to see the RBNZ cutting rates in the next few months," BNZ said in a commentary.
"Consequently, we expect the RBNZ to play with a straight bat and reaffirm its neutral policy stance."
There was a stark reminder of the inflation pressures in this part of the world today when the Australian annual rate of inflation soared above 4 per cent for the first time in almost seven years, increasing the risk of another interest rate rise in coming months.
The Australian central bank's target is 2-3 per cent.
"I think these inflation figures are a stark reminder of the price pressures hitting Australian families," Federal Treasurer Wayne Swan said.
Against the Australian dollar, the kiwi was at A84.06c at 5pm from A84.34c at 8am today from A84.28c at yesterday's local close.
The New Zealand dollar was also buying 82.28 yen from 81.86. The trade weighted index was 70.58 at 8am from 70.40 at 5pm.
BNZ said the US dollar was weighed down by worries about the US economy following lacklustre US data and concern about the effect surging fuel prices will have on consumer spending and corporate profits.
Currency rates:
NZ dlr/US dlr US79.92c US79.43
NZ dlr/Aust dlr A84.06c A84.28c
NZ dlr/euro 0.4996 0.4993
NZ dlr/yen 82.28 81.86
NZ dlr/stg 40.05p 40.08p
NZ TWI 70.58 70.40
Australian dollar US95.09c US94.25c
Euro/US dollar 1.5996 1.5912
US dollar/yen 103.01 103.00
- NZPA
