KEY POINTS:
The dollar retreated yesterday from its two-month high, around US76.70c, as profit-takers moved in to capitalise on its recent rally.
By 5pm, the kiwi had eased to US76.25c from US76.54c on Monday afternoon, and was about half a US cent below its overseas peak.
The kiwi has risen 14 per cent against the US dollar since August 17, and some analysts believe it could have another tilt at US80c this year.
Against the aussie, the kiwi was at A85.92c from A85.96c at 5pm on Monday.
The kiwi rose strongly during the offshore session despite bad news for banking giants UBS and Citibank, as soaring US equities heralded willingness for traders to take on more risk.
That sentiment favours carry trades, in which investors borrow low-yielding currencies such as the Japanese yen to invest in high-yielders such as the kiwi and Australian dollars.
"However, throughout our session we've seen a lot of selling from US and Japanese names," said BNZ currency strategist Danica Hampton.
"Some of this is thought to be profit-taking following the strong rally we've seen in the kiwi over the past week, and some of it ... might be related to uridashi redemptions coming up in the next few weeks,"
The kiwi was likely to find support around US76c as there had been no fundamental changes, she said.
Later this week, global markets will await interest rate decisions from the Bank of England and European Central Bank, followed by US employment data on Friday.
Most analysts bet the worst of the credit crunch is over, despite news giant Swiss bank UBS had to write down US$3.4 billion ($4.47 billion) of losses arising from the sub-prime mortgage meltdown.
- NZPA
