The New Zealand dollar traded in a relatively narrow range today after a volatile overnight session on Tuesday night as it continues to reflect global events.

The NZ dollar was at US67.42c at 5pm from US67.60c at 8am and US67.80c at 5pm yesterday. It rose from around US67.50c in early trading toward US68c then retreated during its domestic session. On Tuesday night it fell to US67c then rose to US68.40c.

The direction of equity markets continued to influence currency markets, Mike Jones, currency strategist at BNZ said.

The NZ dollar market had a lot to absorb today with Australian gross domestic product numbers in line with expectations, a fall in product prices in the latest Fonterra auction, the resignation of the Japanese prime minister and news that US insurer Prudential Plc was pulling out of a deal to buy AIG's Asian life insurance business.

The NZ dollar has been strong against the Australian dollar since Australia held rates yesterday as the Reserve Bank of New Zealand may raise rates next week. Reuters reported that there is a 78 per cent chance of a 25 point basis point rise in the official cash rate on June 10.

It was at A81.24c at 5pm from A80.81c at the same time yesterday.

The NZ dollar rose to 61.55 yen from 61.81 yen yesterday after Japan's Prime Minister Yukio Hatoyama quit.

The US dollar has been generally firm as worries continue that euro zone's debt crisis was spreading to its banking system.

The NZ dollar climbed as high as 0.5565 euro overnight, but fell away to 0.5525 at 8am, and was 0.5521 at 5pm today.

The trade weighted index was 65.83 from 65.99 yesterday.