Currency: Dollar little changed

The New Zealand dollar held onto overnight gains, but made no headway today despite a significant improvement in business confidence.

The kiwi had fallen to a three-week low against the greenback of US62.40c, but then rebounded by more than US1c.

By 5pm, it was at US63.66c, up from US62.80c at the same time yesterday, but unchanged from this morning.

Against the Aussie, the kiwi had risen to A79.73c from A78.99c yesterday. It was also firmer against the euro, yen and sterling.

Business confidence rebounded in the June quarter, with a net 25 per cent of firms expecting the general business situation to deteriorate, better than 65 per cent in the previous quarter, according to the NZIER's quarterly business confidence survey.

The kiwi ignored the data but interest rate markets took an optimistic view and yields rose, meaning the risk of another interest rate cut from the Reserve Bank had receded.

"I would say interest rates probably registered it more correctly than is apparent in the currency," Westpac senior market strategist Imre Speizer said.

The survey could also prompt some revisions to gross domestic product forecasts for the second quarter, which were still likely to be negative but only slightly now.

"Still negative, still recessionary, but much less so. It was a very good report - most of the subcomponents registered improvement," Mr Speizer said.

The Reserve Bank of Australia's decision to hold rates steady at 3 per cent was benign for the currency.

United States earnings reports start coming out next week, which will affect equity markets and flow on to other assets such as the kiwi, he said.

The yen held gains against other major currencies today, as receding optimism over the global economy prompted investors to pare back holdings of riskier assets.

The US dollar was steady after hitting a five-week low against the yen on Monday in the wake of last week's bleak United States employment data.
Currency rates:

NZ dlr/US dlr US63.66c US62.80c

NZ dlr/Aust dlr A79.73c A78.99c

NZ dlr/euro 0.4554 0.4495

NZ dlr/yen 60.70 59.95

NZ dlr/stg 39.13p 38.55p

NZ TWI 60.22 59.48

Aust dlr/US dlr 79.84c 79.48c

Euro/US dlr 1.3983 1.3980

US dlr/yen 95.34 95.46

- NZPA