Dollar recovers after diving on euro woes

The New Zealand dollar market had a day of two halves, with worries about European finances in the morning replaced by optimism about the domestic economy in the afternoon.

Things get interesting tomorrow with a Federal Reserve Open Market Committee statement around 6.15am NZ time followed by the Reserve Bank of New Zealand official cash rate announcement at 9am.

By 5pm the NZ dollar was at US71.44c from US71.10c at 8am and US72.08c at 5pm yesterday.

"Basically, when we walked out yesterday we were US72.20c and when came in today we were US71.20c. Kiwi and aussie were both down a hundred points," one dealer said.

"Euro was still getting hammered and that brought the kiwi down with it," he said.

The NZ dollar traded as low as US71.05c, a level at which it started to build support.

It built further after the National Bank of New Zealand business outlook survey showed a surge in confidence in April.

The NZ dollar and Australian dollar markets were also seen as being "short", or oversold.

The NZ dollar was at A77.55c at 5pm from A77.85c yesterday. It was at 0.5413 euro from 0.5388 at yesterday, and at 66.51 yen from 67.68 yen yesterday.

The trade weighted index was at to 66.51 at 5pm from 67.03 yesterday.

- NZPA