KEY POINTS:
The New Zealand dollar hit a fresh six-week high against the greenback early today as the US currency showed continued weakness.
The kiwi traded throughout the night between US74.25c and US74.70c, then spiked up around 7.30am today to US74.79c. By 8am it had eased slightly to US74.75c.
The ANZ bank noted the NZ dollar had managed to hold on to gains made last week during a sluggish day on the markets yesterday due to a holiday in Japan.
The kiwi would continue to follow the herd and grind up, though clear signs of slowing domestic demand should cap the topside, ANZ said.
Any further negative credit news and sentiment would turn on a dime.
The NZ dollar also strengthened slightly overnight against its Australian counterpart, from A85.87c at 5pm yesterday to A86.10c at 8am today.
But ANZ said that with commodities continuing to rise and despite the winter wheat crop in Australia looking shaky due to drought, the aussie looked the stronger of the two currencies.
While the euro hit another record against the US dollar of US$1.4130, against the NZ dollar the euro touched a four-week low of 0.5310, from 0.5278 at 5pm yesterday.
The NZ dollar was also buying 85.75 yen at 8am from 85.63 at 5pm yesterday, while the trade weighted index was 70.56 from 70.27.
The greenback's record low against the euro was the third in a row, and came amid fears that a deepening housing slump could rein in economic growth and trigger more cuts in US interest rates.
Trade was light as attention shifted to existing-home sales and consumer confidence data due on Tuesday (local time).
Investors are worried that weak economic reports will push the Federal Reserve to follow last week's half-percentage-point rate cut with more policy easing, further eroding the US dollar's yield advantage over other currencies, particularly the euro.
- NZPA
