Dollar starts week strongly above US69c

The New Zealand dollar spent most of today above US69c after strengthening during the weekend.

The NZ dollar was at US69.28c at 5pm from US69.08c at 8am, and 68.03c at 5pm Friday.

News that retail sales fell 0.3 per cent in April was not seen as having implications for Reserve Bank of New Zealand (RBNZ) monetary policy.

Ongoing consumer spending restraint would not stop the RBNZ from hiking further, but it would be influential in terms of where the official cash rate ultimately ended up, ANZ said.

The central bank raised the official cash rate by 25 basis points to 2.75 per cent last Thursday.

Westpac said the RBNZ action was clearly supportive to the NZ dollar but global risk appetite would still be the dominant determining factor for its direction.

"An improvement in global sentiment this week would benefit the Australian dollar more than the NZ dollar," Westpac said.

Rankin Treasury said it would take very little to cause the NZ dollar to become flightless in the current nervous environment.

"Until we see a breach of the US65.50c to US70.00c range, we face a period of deja vu all over again. Thus, exporters should cover under US66.00c and importers add to cover above US69.50c," Rankin Treasury said.

The NZ dollar was buying 63.61 yen at 5pm from 62.26 yen at 5pm on Friday.

ANZ said the NZ dollar should remain high against the yen as the new Japanese Prime Minister Naoto Kan acknowledged their economy was at "risk of collapse under the mountain of sovereign debt".

At 5pm the NZ dollar was 0.5687 euro from 0.5619 euro at 5pm on Friday.

With issues still persisting in Europe and protests now in Germany it was likely it would maintain its ground against the euro, ANZ said.

Against the Australian dollar, the NZ dollar was A80.85c, slightly up from A80.62c at 5pm Friday.

The trade weighted index was 67.30 at 5pm from 66.35 at 5pm Friday.

- NZPA