The kiwi dollar had its wings clipped today amid expectations a dovish Reserve Bank will cut interest rates by 1.5 percentage points later this week.
Shortly after 8am today, the kiwi was buying US54.88c and over the day generally glided down to be buying US54.18c at 5pm.
ANZ
head of foreign exchange trading Tony Allen said the kiwi had struggled all day, mainly on the back of median forecasts for Thursday's official cash rate announcement by the Reserve Bank to cut 150 basis points.
That had put pressure on the dollar, and coupled with other news such as bad building consents data last week, given the currency a negative tone.
Mr Allen said the breadth of selling was wide, from all sectors in the market.
"People are starting to realise this is going to be a very, very dovish RBNZ announcement on Thursday."
The next lot of support for the dollar would be at US53.40 cents and there was a good chance that would be tested before the Reserve Bank of Australia's interest rate announcement tomorrow, he said.
Against the Australian dollar the kiwi slipped from A83.98c this morning to A83.64c and against the euro it went from 0.4317 to 0.4278.
The dollar was buying 35.68p in sterling and dropped to 35.36p.
Against the yen, the dollar dipped from 52.48 yen to 51.62 this evening.
The Japanese yen advanced against major currencies on Monday as expectations grew for rate cuts overseas to counter the fallout from the global financial crisis.
Along with the RBNZ, several central banks this week, including the Bank of England, the European Central Bank and the Reserve Bank of Australia will make decisions on interest rates.
Investors were expected to refrain from taking large positions ahead of those meetings as they focus on whether central banks will surprise with larger-than-expected rate cuts.
The trade weighted index stood at 55.12 at 5pm, down from 55.70 at 8am.
Currency rates:
NZ dlr/US dlr US54.18c US55.17c
NZ dlr/Aust dlr
A83.64c A83.98c
NZ dlr/euro 0.4278 0.4277
NZ dlr/yen 51.62 52.55
NZ dlr/stg 35.36p 35.81p
NZ TWI 55.12 55.70
Aust dlr/US dlr US64.78c US65.65c
Euro/US dlr 1.2666 1.2899
US dlr/yen 95.27 95.27
- NZPA
