KEY POINTS:
Trading in the New Zealand dollar was moribund ahead of the Reserve Bank's crucial interest rate decision on Thursday.
The kiwi closed little changed on US76.13c from its close yesterday with traders unwilling to take positions.
It eased on other cross rates, falling to A77.92c against the aussie dollar from A78.07c yesterday.
The market believes it is a line call whether Reserve Bank Governor Alan Bollard starts cutting rates on Thursday or holds off until September as he indicated last month.
A move tomorrow is likely to steepen the kiwi's decline as it will show Dr Bollard is so worried about the economy's slide he decided to act immediately despite inflation heading towards 5 per cent.
The trade weighted index closed on 67.25 against 67.45 at 5pm yesterday.
The US dollar was steady against the major currencies after falling near a record low against the euro the previous day as investors believe the worst of the problems in the US financial system are not yet over, effectively helping support the euro.
While the dollar has recovered somewhat after better-than-expected results from big financial institutions such as Citigroup JPMorgan Chase and Bank of America, investors were awaiting more earnings reports this week.
The market's focus remains on a rescue plan for troubled US mortgage finance giants Fannie Mae and Freddie Mac after US Treasury Secretary Henry Paulson said on Sunday that he was optimistic that Congress would approve the government's request for authority to shore them up.
Troubles at Freddie Mac and Fannie Mae may further undermine foreign investor confidence in US agency bonds, encouraging investors such as those in China and the Middle East to shift funds from the dollar into the euro, some traders said.
Reuters currency rates:
4.30pm today 5pm Monday
NZ dlr/US dlr US76.13c US76.18c
NZ dlr/Aust dlr A77.92c A78.07c
NZ dlr/euro 0.4779 0.4798
NZ dlr/yen 80.93 81.35
NZ dlr/stg 38.00p 38.19p
NZ TWI 67.25 67.45
Australian dollar US97.63c US97.56c
Euro/US dollar 1.5925 1.5872
US dollar/yen 106.42 106.83
- NZPA
