NZ dollar at bottom of range as ECB forum awaited

The kiwi was little changed at 84.15 US cents at 8am in Wellington from 84.13 cents at 5pm yesterday.

The New Zealand dollar held near the bottom of its recent band ahead of the European Central Bank forum which may give investors clues to how the monetary authority will stave off threats to the regional economy. Holidays in the US and UK are likely to keep trading volumes light, traders said.

The kiwi traded at,85.33 US cents 5pm in Wellington from 85.36 cents at 8am and 85.39 cents on Friday in New York. The trade-weighted index was 79.73 from 79.78 at the Friday close.

ECB president Mario Draghi opened the three-day conference near Lisbon, and traders are looking for any clues as to how the central bank will overcome low inflation and whether the bank will ease monetary policy further through a series of stimulus measures.,Memorial Day in the US and a bank holiday in the UK means trading desks in New York and London will be closed on Monday, reducing liquidity and opening up potential for a volatile session.

"The ECB speakers have started off fairly dovish" and "there's still more ECB rhetoric to come," said Alex Hill, head of trading at HiFX in Auckland. "The euro is under pressure, which is keeping the US dollar bid firmly and commodity currencies down."

HiFX's Hill said the lack of liquidity in the market means traders could push the kiwi around in the Northern Hemisphere session. The kiwi is trading about 20 basis points above a strong support level, he said.

A,BusinessDesk survey of 10 traders and strategists predicts the local currency may trade between 84.30 US cents and 86.50 cents this week. Seven predict the kiwi will fall this week, while three expect it to increase.

The board of Fonterra Cooperative Group is expected to cut its forecast payout to farmers after several months of declining dairy prices, something the Reserve Bank governor Graeme Wheeler has signalled should lead to a drop in the kiwi dollar.

The local currency traded at 86.98 yen at 5pm in Wellington from 87.06 yen on Friday in New York, and was little changed at 92.37 Australian cents from 92.44 cents. It traded at 62.66 euro cents from 62.63 cents last week, and,was at 50.69 British pence from 50.73 pence.