The New Zealand dollar today reversed much of its earlier recovery from a nearly one-week low, although it briefly spiked higher after the Reserve Bank of Australia said its recent decision to leave rates steady was finely balanced.
By 5pm, the kiwi was worth US75.40c, about half a cent below
its opening level, but above the US75.17c it traded at late yesterday.
The kiwi hit a 27-month high around US76.40c last Thursday, and has been climbing steadily since June.
"The dominant influence on NZD/USD at present is US dollar weakness, in turn driven by expectations of US central bank quantitative easing (money printing) at its November 3 monetary policy meeting," Westpac senior markets strategist Imre Speizer said.
"While this influence persists, other factors such as New Zealand's economic strength and interest rate differentials remain largely irrelevant to the exchange rate."
Westpac expected the kiwi to hit US76.40c during the week, which would then open the way to US77.60c and above.
The currency was not likely to fall below US74c this week.
The US dollar was undermined after US Federal Reserve chairman Ben Bernanke had failed to deliver the "all guns blazing" approach to quantitative easing that markets had hoped for at the end of last week.
Against the Australian dollar, the kiwi was at A76.41c from A76.30c late yesterday. It was steady against the euro at 0.5416, and a touch higher against the yen and sterling at 61.35 yen and 47.51p.
The trade weighted index rose to 66.86 from 66.75.
The Reserve Bank of Australia said in minutes released today from its meeting early this month that it could not wait indefinitely to raise rates because of long-term inflation risks. Expectations are rising that Australia's central bank will hike its benchmark rate, currently at 4.50 per cent, to 4.75 per cent next month.
- NZPA
