NZ currency: Dollar hovers around US80c

The New Zealand dollar finished the day still fluctuating around the US80c level at which it opened at the end of the Easter break, down a little on the three-year peak of US80.35c it hit on the eve of the long weekend.

It was US79.99c at 5pm, compared with US80.00c at 8am, and US79.98c at 5pm on Thursday, after a modest bounce in the US dollar - up from its 30 month lows last week.

ANZ Bank said that while the NZ dollar had briefly been above resistance at US80.25c during Easter weekend trading, it had lost its sparkle as commodity prices reversed highs.

Gold and silver prices hit fresh all-time highs overnight and the BNZ Bank said today that it expects that NZD/USD dips will be limited to around US78.80 this week, and if global commodity prices continued to climb "there is every chance we see a test of the post-float high of US82.13 sometime over the next week or so".

The BNZ said that sentiment toward the greenback will remain the biggest driver of the NZD/USD exchange rates in the short-term, though Thursday's Reserve Bank (RBNZ) policy announcement might provide some more domestic direction for the local currency.

"We believe the RBNZ will want to deliver a 'nothing to see here' message this week, including a signalled steady cash rate of 2.50 per cent for the near future," it said.

The trade-weighted index (TWI) key to monetary policy considerations was not far away - at 68.81 points at 5pm - from the RBNZ's March assumption of a 68.00 average for the June quarter.

Globally the key "event risk" of the week is the Federal Open Market Committee meeting in the US, on Thursday (NZ time) and its first regularly-scheduled news briefing by US Federal Reserve chairman Ben Bernanke to see how the US central bank plans to exit from its ultra-loose policy.

Overnight, the euro rose against the US dollar in a volatile but illiquid session with investors reluctant to make large bets in case the Fed shows no sign of changing its easy monetary policy.

The NZ dollar was buying 0.5487 euro at 8am today, little changed from its level at 5pm on Thursday, but clawed its way up to 55.06 euro at 5pm today. At the same time, it also gained on the trans-Tasman cross-rate to A74.86c at 5pm today from A74.45c at 5pm on Thursday.

The kiwi dropped to 65.35 yen at 8am today from 65.80 at 5pm on Thursday and then fell fractionally further to 65.34 at 5pm.

- NZPA