KEY POINTS:
The New Zealand dollar rebounded against both the Australian dollar and the US dollar today.
It started the session below A83c following robust house price, job ads and inflation data across the Tasman yesterday.
However, although the kiwi is expected to keep sliding against its trans-Tasman counterpart after last week dropping below the A83c level for the first time in nearly six months, it recovered to A83.22c by today's close.
The Reserve Bank of Australia (RBA), which held its monthly board meeting today, left interest rates on hold after raising them in February and March as it battled to cool a booming domestic economy and restrain inflation.
The Australian dollar slipped about a quarter of a US cent to US94.50c in reaction to the statement, which was not as hawkish as some in the market had wagered on.
Bond and bill futures firmed as investors took the statement as lessening the risk of yet another rate hike.
Against the US dollar, the kiwi firmed to US78.60c compared with US78.25c at 5pm yesterday.
The trade weighted index firmed to 70.25 from 70.17.
The US dollar weakened as doubts resurfaced about the health of the US economy while record oil prices lifted commodity currencies such as the Australian and Canadian dollars, and to a lesser extent, the New Zealand dollar.
The euro rose 0.3 per cent against the dollar, overcoming yesterday's data showing an unexpected weakening in euro zone investor morale and helped by ECB President Jean-Claude Trichet's warning of significant inflation risks.
"The dollar is coming under renewed pressure as global risk appetite appears to be stabilising," said Callum Henderson, head of currency strategy at Standard Chartered Bank. "Investors have a lot of cash and are starting to reinvest, refocusing on nominal interest rate spreads and going for carry.
"In this environment, the dollar, which rallied on a positional short squeeze rather than improving fundamentals, is once again under pressure due to low yields."
Reuters currency rates:
NZ dlr/US dlr US78.60c US78.25c
NZ dlr/Aust dlr A83.22c A83.37c
NZ dlr/euro 0.5061 0.5062
NZ dlr/yen 82.31 82.32
NZ dlr/stg 39.80p 39.61p
NZ TWI 70.25 70.17
Australian dollar US94.46c US93.86c
Euro/US dollar 1.5517 1.5459
US dollar/yen 104.85 105.20
- NZPA
