KEY POINTS:
The New Zealand dollar rose on better than expected gross domestic data today but dealers said the long term trend is downward.
The NZ dollar was at US68.76c by 5pm today, up from the US68.25c at 8am and US68.60c at 5pm yesterday.
Though second quarter GDP data confirmed the economy is in recession the 0.2 per cent fall in the quarter was less than the 0.5 per cent the market was expecting.
"Most people were erring on the side of a worst than expected number so the market was short kiwi going into the number," John Body, head of markets at ANZ, said.
"A lot of those positions got closed out and the market decided to square up for the weekend," he said.
The talks to save the US financial system stumbled today so that situation is expected to remain a focus.
For NZ dollar investors the expectation is still that the Reserve Bank will be cutting interest rates over time and that implies a weaker currency.
Interest rate cuts would ultimately drive the direction of the NZ dollar, Mr Body said.
By 5pm the kiwi was buying 0.4687 euro against 0.4665 yesterday, and 72.70 yen from 72.65 yen. Against the Australian dollar it was at A82.47c against A81.78c. The trade weighted index was up at 64.32 from 64.04.
- NZPA
