Downward pressure on the New Zealand dollar was today counter-acted by weakness in the US dollar due to fresh concern about the US economy and stocks.
In contrast to yesterday's trading, business was subdued. The kiwi closed little changed from its opening and yesterday's close at US74.28c.
Yesterday's
selling in the wake of the Reserve Bank's interest rate cut continued overnight, with the kiwi sliding to near its lowest level this year of US73.85c. However, it picked up in late New York trading as the greenback weakened.
While the selling abated there was no appetite to take the kiwi higher.
BNZ strategist Danica Hampton said the downtrend in kiwi was slowed by profit-taking on short NZ dollar-Australian positions and by the generally weaker US dollar.
At the close, the kiwi was buying A77.56c, barely changed from the same time yesterday.
BNZ expected bounces in the kiwi to be limited to the US74.40-74.50c region as concerns about the economy and looming interest rate cuts take their toll.
"However, solid support is seen ahead of US73.80c and a break below this level will likely require a general improvement in US dollar sentiment."
The US dollar dropped against the yen on disappointing news on the US housing sector and steep losses on Wall Street.
US jobless claims have jumped and the pace of existing home sales has tumbled to a 10-year low, reminding investors of the problems plaguing the world's largest economy.
Overseas traders are tepid towards the New Zealand dollar, and for now the steam appears to have gone out of the carry trade.
"There are no major currencies attractive enough to draw aggressive buying now," said a trader at a major Japanese bank.
The Australian dollar fell on concerns about the impact of the credit crisis on the nation's top lender.
National Australia Bank Ltd said it had raised provisions for its exposure to collateralised debt obligations (CDOs) by a further A$830 million ($1.1 billion).
The Australian dollar slid 0.3 per cent to US95.56c but recovered to US95.77c.
Reuters currency rates:
NZ dlr/US dlr US74.28c US74.30c
NZ dlr/Aust dlr A77.56c A77.51c
NZ dlr/euro 0.4733 0.4735
NZ dlr/yen 79.37 80.18
NZ dlr/stg 37.41p 37.20p
NZ TWI 66.22 66.28
Australian dollar US95.77c US95.91c
Euro/US dollar 1.5698 1.5702
US dollar/yen 106.82 107.83
- NZPA
