KEY POINTS:
The New Zealand dollar traversed one US cent today as the Reserve Bank of NZ decision to leave rates steady first disappointed, then spurred on, investors.
By 5pm, the kiwi was near the top of its day's range at US70.02c, from US69.93c late yesterday. Against the Aussie, the kiwi had gained to A88.80c from A89.29c.
The NZ dollar slipped about half a US cent to US69.25 this morning when Reserve Bank Governor Alan Bollard left the benchmark rate at 7.25 per cent.
However, it recovered and bounced to a high of US70.20c after the market digested Dr Bollard's hawkish statement promising further rate rises if domestic demand did not ease.
"We bounced after everybody had read the statement ... we saw some good demand on the way up, mainly from offshore," said one dealer.
"Also we saw people cutting long Aussie-short kiwi (positions) again," he said.
The Australian dollar was weakened by soft inflation indicators yesterday, which lessened the risk of an imminent rise in interest rates.
The kiwi was likely to remain around current levels, with good support at US69.30c, and resistance at US70.20c, the dealer said.
"We were quite a while above US70c, and we keep blipping back up."
The kiwi recovered against the yen, from 84.10 this morning to 84.35, although it is below last night's level of 85.09.
The yen rebounded against the US dollar and other major currencies after sources said the previous day that European officials want to complain over the Japanese currency's weakness at next month's Group of Seven meeting.
The reports prompted more market players to cover the big positions betting against the yen that had built up and pushed the Japanese currency to a record low against the euro and a four-year low against the dollar this week.
Rates:
5pm today 5pm yesterday
NZ dlr/US dlr US70.02c US69.93c
NZ dlr/Aust dlr A89.80c A89.29c
NZ dlr/euro 0.5400 0.5367
NZ dlr/yen 84.37 85.09
NZ dlr/stg 35.59p 35.29p
NZ TWI 69.61 69.45
Australian dollar US77.96 US78.31c
Euro/US dollar 1.2960 1.3031
US dollar/yen 120.53 121.56
- NZPA
