KEY POINTS:
The New Zealand dollar's hefty overnight bounce lost height during the day session today.
Having added US1-1/2c overnight on the back of a rebound by stock prices in the United States, the kiwi closed on US70.18c. That was still nearly a cent ahead of yesterday's US69.30c close.
The kiwi fell as the yen rebounded from heavy losses in the previous session after British newspaper The Times reported that the co-head of RBS Greenwich Capital's collateralised debt obligations unit had left the bank.
High-yielding currencies also took a hit after an Australian hedge fund filed for bankruptcy protection in the US, while on the local scene the collapse of a seventh finance company in 16 months did nothing to improve confidence.
ANZ bank said that, for now, US equities continued to provide the lead for other markets.
Not surprisingly, a sharp recovery in the Dow Jones industrial average overnight had seen the NZ dollar recover, ANZ said.
"But the kiwi is still vulnerable to a move lower given signs of a slowing housing market and further problems in the finance company sector."
There was further evidence of a housing market slowdown today from new dwelling permit numbers. These showed a 15.5 per cent seasonally adjusted fall last month.
However, economists said the fall was a reversal of June's upward spike.
The Reserve Bank today revealed that in July it intervened in foreign exchange currency markets to sell a net 1.5 billion New Zealand dollars, double the amount sold in June.
Against the Japanese currency, the kiwi strengthened from 79.31 yen at 5pm yesterday to 81.18.
The yen also slid against the euro and the greenback, reversing two days of gains, as investors took recovering US stock markets as a cue to slash short-term bets that the Japanese currency would strengthen.
Against the Australian dollar, the kiwi rose from A85.65c at yesterday's local close to A85.92c while the trade-weighted index was 67.68 from 66.94.
Reuters currency rates:
5pm today 5pm yesterday
NZ dlr/US dlr US70.18c US69.30c
NZ dlr/Aust dlr A85.92c A85.65c
NZ dlr/euro 0.5138 0.5199
NZ dlr/yen 81.18 79.31
NZ dlr/stg 34.82p 34.62p
NZ TWI 67.68 66.94
Australian dollar US81.69c US80.87c
Euro/US dollar 1.3657 1.3596
US dollar/yen 115.66 114.38
- NZPA
