KEY POINTS:
The New Zealand dollar recovered after an earlier retreat, largely ignoring weaker housing and trade data today.
Investors were giving the kiwi a short-term boost as they squared up ahead of the Reserve Bank of NZ's interest rate decision on Thursday, expected to be no change to the 8.25 per cent official cash rate but with some tough talk on inflation in the accompanying statement.
"(The kiwi was) stronger overnight, opened up weaker along with Japanese equities starting off weaker as well, and just bounced later this afternoon," Westpac currency strategist Michael Gordon said.
By 5pm, the kiwi was at US69.53c from US68.85c late yesterday afternoon, above its low today of US69.23c. Overnight, the kiwi had risen more than 1-1/2c against a soft US dollar.
Against the Aussie, the kiwi rose to A83.95c from A83.77c, and it rose to 79.09 yen from 78.01 yen yesterday afternoon.
There was surprisingly little reaction to the terms of trade, and no obvious reaction to the Real Estate Institute's (REINZ) monthly housing data, Mr Gordon said.
New Zealand's terms of trade rose 0.6 per cent in the June quarter, well below economists' expectations and failing to reflect record high world prices for dairy products.
Also today, the median house price returned to a record high $350,000 in August but sales volumes fell to a seven-year low, the Real Estate Institute (REINZ) said. The low number of sales made it difficult to gauge the state of the market, it said.
The kiwi had been noticeably weaker than other currencies in the last couple of weeks, and it was unlikely to make much headway with the continuing global credit squeeze not favouring high-yielding currencies, Mr Gordon said.
The US dollar hovered near a 15-year low against a basket of currencies, with investors expecting the Federal Reserve to cut interest rates next week as the US economy shows signs of adverse effects from the credit market turmoil.
Reuters currency rates:
5pm today 5pm yesterday
NZ dlr/US dlr US69.53c US68.85c
NZ dlr/Aust dlr A83.95c A83.77c
NZ dlr/euro 0.5038 0.4997
NZ dlr/yen 79.09 78.01
NZ dlr/stg 34.29p 33.93p
NZ TWI 66.46 65.88
Australian dollar US82.86c US82.19c
Euro/US dollar 1.3798 1.3779
US dollar/yen 113.76 113.29
- NZPA
