NZ dollar treads water as traders ponder covid impacts

New Zealand cash, money or currency. Notes and coins

The New Zealand dollar traded in a tight range as traders continue to weigh up the rising number of new covid cases against ongoing optimism in equity markets.

The kiwi traded at 65.54 US cents at 5pm in Wellington from 65.42 cents at the same time on Friday. The trade-weighted index was at 72.14 from 72.06 last week.

Stock markets across Asia were mixed as investors prepare for further US corporate earnings and the potential for policy support against growing cases of covid-19, with Hong Kong shutting bank branches as the Asian financial hub goes through another spike in cases.

"This covid thing, arguably, is not being taken seriously enough," said Mark Johnson, a senior dealer at OMF.

"Until we see a major risk-off event, the kiwi's going to be treading water."

Finance Minister Grant Robertson today said he will hold the remaining $14 billion of the original $20 billion in the covid response fund for any second wave that NZ experiences.

And local data today showed activity in the services sector bounced back in June as the economy kicked back into gear from the covid lockdown, although firms are still planning to lay off staff.

The Global Dairy Trade auction on Wednesday morning will be the main data for the week, with traders keen to see whether the rally in dairy prices will continue. Fonterra Cooperative Group last week lifted the bottom end of its forecast range for the current season due largely to recovering demand in China.

The kiwi traded at 93.78 Australian cents from 93.67 cents last week, 70.29 yen from 70.13 yen, 4.5819 Chinese yuan from 4.5904 yuan, 57.26 euro cents from 57.47 cents, and 52.29 British pence from 52.08 pence.

The bid price on the two-year swap rate was 0.1650 per cent from 0.1950 per cent on Friday, while 10-year swaps were at 0.6750 per cent from 0.6850 per cent.