The New Zealand dollar oscillated around the US77c level today as traders absorbed a weaker than expected Australian building approvals report and nervously awaited election results and monetary policy developments in the United States.
The NZ dollar was at US77.08c at 5pm from US77.17c at 8am and US76.47c at 5pmyesterday. It peaked around US77.40c on Wednesday night, its highest level since June 2008, after the Australian dollar rose on the surprise interest rate hike by the Reserve Bank of Australia (RBA) on Melbourne Cup day.
The 25 basis point rise to 4.75 per cent highlighted the contrast with the Federal Reserve in the United States, which is widely expected to ease policy further to help revitalise the US economy.
The Fed's move is expected to be announced tomorrow morning New Zealand time.
The size and extent of the so-called quantitative easing has been a pre-occupation of markets around the world and the US dollar has generally been weak ahead of the announcement. Traders are generally expecting the Fed will initially commit to buying at least $500 billion of Treasuries over five months.
In the meantime news that Australian building approvals dropped 6.6 per cent in September, from a downwardly revised 4.8 per cent drop in August surprised analysts who had expected no change in the monthly figure.
The Australian dollar fell to be US99.74c at 5pm after it earlier achieved parity with the US dollar. It knock back was a dampener for the NZ dollar against the greenback, though the local currency rose to A77.28c at 5pm from A76.64c at the same time yesterday.
The NZ dollar had dived against the aussie yesterday after the Australian rate decision shortly before 5pm, dropping close to A76.40c.
The NZ dollar rose to 62.21 yen at 5pm from 61.60 at 5pm yesterday, and was 0.5501 euros from 0.5494 euros yesterday.
The trade weighted index lifted to 67.98 at 5pm from 67.52 at the same time yesterday.
