NZ dollar gains on weakening US dollar

The New Zealand dollar gained on a weakening greenback after comments from the Reserve Bank of Australia yesterday spurred traders' appetite for high-yielding currencies.

By 8am the kiwi was buying US69.33c from US68.85c at 5pm yesterday.

ANZ bank said that even weaker Fonterra online auction results had done little to dent the fortunes of the NZ dollar in early morning trading.

Selling pressure mounted on the US dollar after a lacklustre service sector report in the United States added to fears of further slowdown in the US economy.

The RBA had held its key interest rate at 4.5 per cent, saying policy was appropriate given caution in global markets even as it remained optimistic about the outlook for Asia and the domestic economy.

The NZ dollar slipped to A81.50c at 8am from A81.88c at 5pm yesterday, but gained to 60.66 yen from 60.35, and was slightly up to 0.5494 euro. The trade weighted index was up to 66.14 around 8am from 65.95 at 5pm yesterday.

Westpac said the aussie was the outperformer of the day, following the RBA decision.

"Leaving the door open for further hikes, the statement was not as dovish as the market had perhaps anticipated."

For the 24 hours from 8am today, Westpac said the kiwi might find itself on the back foot after the weak result at the Fonterra auction, where average prices were down 13.7 per cent and few contracts traded above the minimum starting price.

That emphasised how sensitive the market was about global growth prospects.

- NZPA