The New Zealand dollar is heading for a 1.6 per cent quarterly gain against the US dollar after a whippy three months that saw it around 5 per cent higher at one stage as the greenback remained out of favour.
The New Zealand dollar traded at 71.99 US cents as at 5pm versus 72.07 US cents as at 8am in Wellington and 72.69 cents late yesterday. it began the quarter around 70.80 US cents. The trade-weighted index fell to 74.04 as at 5pm from 74.50 late yesterday.
The kiwi has come under some pressure in Asia after data showed the US economy didn't slow as much as expected in the final three months of 2017, which saw the greenback gain some support. Easing fears of a global trade war also helped the US dollar.
Over the quarter, however, the kiwi "has outperformed. It's like the Swiss Franc of the South Pacific. You see safe-haven buying of Swiss Francs and then the kiwi looks good," said Tim Kelleher, head of institutional foreign exchange sales at ASB Bank.
The kiwi also remained firm against the Australian dollar, trading at 93.92 Australian cents from 94.40 cents late yesterday and up 3.4 percent in the quarter. "The Aussie is much more exposed to China than we are, so people who are hedging Asian risk, they tend to sell the Aussie dollar."
Looking ahead, however, Kelleher said the market is "very delicately poised" heading into the long Easter weekend. He is expecting reasonably sized portfolio reallocations of currencies overnight because equity markets have moved so much lower, something that is likely to be negative for both the kiwi and the Aussie, he said.
If there is any hint of inflation in the overnight PCE Indicator - thought to be the Federal Reserve's preferred measure - "it could be off to the races," he said. That, coupled with light liquidity, and quarter end moves, could see the kiwi dip below support at around 71.50 US cents, he said.
The New Zealand dollar traded at 58.37 euro cents from 58.54 cents late yesterday and fell to 4.5289 yuan from 4.5674 yuan. It traded at 76.67 yen from 76.70 yen and was little changed at 51.10 British pence from 51.20 pence.
New Zealand's two-year swap rate rose 1 basis point to 2.21 and the 10-year swap rate fell one basis point to 3.04 per cent.