Kiwi just holds own against greenback

The New Zealand dollar was only able to hold its own against a United States currency weakened by US homebuilder sentiment slumping to a 15-month low.

Around 8am today the kiwi was buying US70.68c, having ranged overnight between US71.10c and US70.30c, its lowest level in nearly a fortnight.

The NZ dollar was slightly lower at 0.5461 euro by the local open from 0.5478 at 5pm, having troughed during the session to around 0.5420 euro, its lowest level in nearly two months.

Traders said a large buy order from the Middle East, executed through a major US bank in London had lifted the euro, which was also seen to be simply trading on US dollar weakness.

ANZ said support levels for the NZ dollar were investigated in local and offshore sessions but failed to give way as weaker US economic picture took hold, but by 8am today the bounce had been extremely limited.

Any attempts by the NZ dollar to push above US71c should again be met with reasonable selling interests, while further tests of support around US70.34c continued to be on the cards, ANZ said.

The NZ dollar fell to A81.18c at 8am against the Australian dollar from A81.54c at 5pm yesterday, and was slightly up to 61.39 yen from 61.27. The trade weighted index was 66.51 at 8am from 66.59 at 5pm.

Demand for the US dollar fell after the NAHB Wells Fargo Housing Market index fell more than expected in July to its lowest level since April 2009 after a popular tax credit for homebuyers expired in April.

The report was the latest in a string of data that has flashed warnings about the state of the US economy and quashed expectations of a Federal Reserve interest rate hike this year.

Analysts say markets are particularly sensitive to housing data as the sector's deterioration was a major reason for the US economy's descent into recession and will be a crucial component of a lasting recovery.

- NZPA