Investor caution keeps NZ dollar weak

The New Zealand dollar was mixed today as nagging worries about the global financial system generally kept investors from taking on too much risk.

By 5pm the NZ dollar was buying US55.73c, up from US55.56c yesterday. Dealers said the NZ dollar traded in a range between US55.30c and US55.87c during its domestic session.

It was weak early in the day after US equities closed lower. Worries about financial institutions surfaced again after Morgan Stanley reported a larger than expected loss.

The International Monetary Fund also predicted the current downturn will be the deepest since World War 2.

Dealers said all the bleakness affected both the Australian dollar and NZ dollar but the NZ dollar managed a bounce from lows in afternoon trade.

The NZ dollar will encounter resistance at US55.80c and US56.20c and has support around US55.20c and US54.20c.

Against the Australian dollar it was at A78.85c at 5pm from A78.86c yesterday and against the yen it was 54.50 yen from 54.58 yesterday.

The trade weighted index was 55.83 from 55.78 yesterday.

Attention will turn to the Reserve Bank of New Zealand interest rate decision next Thursday, with a 50 basis point cut to 2.5 per cent expected.

- NZPA