Dollar trades in range below recent highs

The New Zealand dollar traded in a range below recent highs today as investors started to shun currencies in this part of the world again but it gained against the Australian dollar.

The NZ dollar was US74.04c at 5pm, having traded between US73.74c and US74.14c during the session. It was at US73.99c at 5pm yesterday.

"Gold and oil came off a little late in the New York session and the aussie dollar was weaker against the kiwi. The real mover overnight was the liquidation of some of these long aussie positions," said Murray Hindley, chief currency dealer at ANZ.

Late today a stronger than expected ANZ Commodity Index reported lent support to the NZ dollar. The index rose 30 per cent in 2009.

China's central bank also surprised global markets with a statement early today (NZT) that it would raise the reserve requirement ratio by a half-percentage point, effective next week, in the clearest sign yet of monetary policy tightening.

Commodity-linked currencies - including the Australian, NZ and Canadian dollars - all hit session lows against the US dollar, following a sell-off in gold prices. The commodity currencies also tumbled against the Japanese yen.

"But as the dust settles, attention will centre on a simple question: is this a sign of the bank getting ahead of the curve, and thereby good for risk, or negative and in line with the immediate knee-jerk reaction?," ANZ said.

The NZ dollar was at A80.22c at 5pm from A79.88c at the same time yesterday. It was at 67.39 yen from 68.26 yen and 0.5114 euro from 0.5111 euro.

The trade weighted index was little changed at 66.92 at 5pm from 66.96 yesterday.

- NZPA