Dollar little changed, all eyes on US

The New Zealand dollar consolidated today against a greenback hit by news last week that the United States economy shed twice as many jobs in July as expected, adding to worries about economic recovery.

At 5pm today the NZ dollar was buying US73.16c from US73.29c at 8am and US72.76c at 5pm on Friday.

Analysts said the weak jobs report, combined with a recent string of poor data may lead the US Federal Reserve to renew Treasury and mortgage bond purchases to jolt the economy.

That would drag US Treasury benchmark yields even lower and further dampen returns in US dollar-denominated assets.

"It's just not safe to hold (US) dollars. Quantitative easing is back on the table and it will push yields even lower," said Douglas Borthwick, head trader at Faros Trading LLC, in Stamford, Connecticut. "There are very few reasons out there to buy it."

Rankin Treasury said the Federal Reserve Open Market Committee meeting decision due early on Wednesday morning NZ time will be key to all currency direction this week.

"The fantod about the parlous state of the US economy and the US dollar is gathering in intensity," Rankin Treasury said. The Obama administration was seen as "fiddling while Washington burns".

Any talk of quantitative easing, effectively printing money, would cause a rapid and further decline in the US dollar.

BNZ markets strategist Mike Jones said US dollar weakness was the dominant driver of currency markets for now, a trend that was tending to float all boats.

The NZ dollar was 0.5510 euro at 5pm from 0.5518 at 5pm on Friday, and 62.55 yen from 62.60.

Against the Australian dollar, the NZ dollar was at A79.71c from A79.52c on Friday.

The trade weighted index was up to 67.25 from 67.14 on Friday.

- NZPA