Currency: NZ dollar rescales US68c

The New Zealand dollar gained half a US cent today to rescale US68c, but the rise had little to do with reviving kiwi sentiment where the news was mostly bearish.

The US dollar notched big losses against most currencies in follow-up reaction to Friday's weaker than expected jobs data.

Traders will take a close look at US trade, retail sales, and consumer price figures later this week to see if the Federal Reserve still has a case for steadily raising interest rates.

"Perhaps there are a few jitters out there about the trade data coming up on Wednesday," said Nobuaki Kubo, forex planning manager at Resona Bank.

The US dollar has pulled back from 19-month highs against sterling and 14-month highs versus the euro.

"The dollar is in no danger of collapsing," said Mr Kubo. "Unless we get any nasty surprises to pull the ladder out from under dollar bulls this week, the rally will return to cruising speed."

The kiwi closed at US68.10c compared with US67.55c at 5pm yesterday.

BNZ currency strategist Sue Trinh said the kiwi was pushed up as investors betting on a further short term fall by the kiwi were squeezed by the greenback's weaker tone.

She said the kiwi was also finding support from ongoing uridashi issuance which exceeded $500 million so far this month.

Eurokiwis and uridashis are New Zealand and Australian dollar denominated bonds sold to retail investors in Europe and Japan, where central bank rates are far lower than New Zealand's 6.75 per cent and Australia's 5.5 per cent.

Despite its move higher last night, the BNZ remained "firmly of the view that the New Zealand dollar is headed below US65c over the coming 3-6 months".

The euro was buying US$1.2161 (from US$1.2011 at 5pm yesterday), while the greenback was buying 111.35 yen (111.83). The aussie was buying US$75.10c (US74.37c).

Today's NZIER June Quarterly Survey of Business Opinion showed business confidence worsened so that a net 34 per cent of firms now expected business conditions to deteriorate over the next six months, against 28 per cent of pessimists in the March quarter.

The NZIER said the current low level of business confidence had only been seen "a handful of times since the early nineties".

On its crosses, the kiwi was fetching A90.70c (A90.83c), 0.5595 euro (0.5624), 38.58 British pence (38.75), 0.8702 Swiss francs (0.8754) and 75.80 yen (75.55).

The TWI was at 68.92 (68.84) and the monetary conditions index at plus 944 (939).

On the money markets, 90-day bank bill yields closed on 7.03 per cent (7.04). Bond yields fell lower in the wake of the NZIER report. July 2009 bond yields fell to 5.88 per cent (5.91) and the ten year April 2015s fell to 5.78 per cent (5.80 per cent).

- NZPA