KEY POINTS:
Encouraged by buoyant equities markets, the New Zealand dollar climbed back over US79c today.
The kiwi closed the session on US79.06c from US78.48c at 5pm.
However, the kiwi briefly dropped below A84c early today to a five-month low against its Australian counterpart, a much happier level for exporters from this country to Australia.
It ended the session on A84.31c from A84.72c at 5pm yesterday, after having been above A85.70c on Monday night.
The US dollar held near an all-time low against the euro after a sharp fall in housing starts reinforced expectations US interest rates will be cut again, while record high inflation backed views euro zone rates will stand pat.
The US dollar was undermined after data showed that housing starts dropped by 11.9 per cent last month and that March consumer prices rose a less-than-expected 0.3 per cent, supporting expectations that the Federal Reserve will cut rates by at least 25 basis points to 2 per cent in late April.
"The dollar continues to be weak, while investors chase currencies whose yields are not seen falling," said Tsutomu Soma, senior manager of foreign assets at Okasan Securities.
The Nikkei share average was up 2.3 per cent as the local market closed. It tracked an overnight rise in US shares after Intel Corp, JPMorgan Chase & Co and other blue chips reported earnings that reassured investors worried that a weak economy would sap corporate profits.
The NZ dollar hit an eight-month low against the euro overnight around 0.4930, having been at 0.4967 at yesterday's local close and buying 0.4960 at the close.
Against the yen the kiwi moved up from 79.77 to 80.60 at today's close. The trade weighted index ended on 70.02 from 69.81.
ANZ Bank said the kiwi was underperforming the aussie, a clear sign that weakening domestic prospects were starting to weigh on the NZ currency, despite its standout yield differential.
With the support level of A84.50c broken overnight, the familiar chart point of A83.33c appeared within reach.
Reuters currency rates:
NZ dlr/US dlr US79.06c US78.48
NZ dlr/Aust dlr A84.31c A84.72c
NZ dlr/euro 0.4960 0.4967
NZ dlr/yen 80.60 79.77
NZ dlr/stg 40.09p 40.00p
NZ TWI 70.02 69.81
Australian dollar US93.75c US92.64c
Euro/US dollar 1.5928 1.5799
US dollar/yen 101.92 101.66
- NZPA
