Kiwi dollar regains ground overnight

The New Zealand dollar recovered overnight in a thin but volatile market with holidays in Japan and the United States.

After reaching a one-week low near US72.50c about 8pm, the kiwi was up to US73.22c around 8am.

ANZ bank said the NZ dollar fell yesterday and overnight before reality kicked in.

"Buying demand began in the European session as the USD began to weaken. It has continued despite the absence of US players," ANZ said.

US dollar strength which emerged at the end of last week had waned, as the greenback came under renewed selling pressure.

"Increased risk appetite means further downside for the USD, which in turn means further grinds higher for the NZD, though we expect the kiwi to underperform the AUD," ANZ said.

Against the Australian dollar, the kiwi ran into substantial buying demand around A80.50c overnight and that support level did not break.

By 8am the NZ dollar was at A80.91c.

The kiwi was also up to 0.4956 euro at 8am from 0.4941 at 5pm, and was up to 65.79 yen at the local open from 65.46. The trade weighted index was 66.06 at 8am from 65.71 at 5pm.

The US dollar was mostly lower as investors shunned it for higher-yielding currencies and assets on the belief that corporate quarterly earnings, including from some top US banks, will exceed expectations.

Though the relationship has weakened lately, some investors still sell the US dollar against other currencies when optimism grows and buy assets such as stocks and commodities instead.

- NZPA