NZ dollar holds most gains

File photo / NZ Herald

The New Zealand dollar held on to most of its gains against the greenback, after spiking to a 10-month high around US74.60c early on Saturday.

At 5pm today the kiwi was buying US74.26c, having eased against a broadly strengthening US dollar from US74.40c at 8am.

The US dollar had been battered as expectations rise that the Federal Reserve is close to resuming quantitative easing to give a boost to the sluggish US economy.

The NZ dollar also managed to make up a little ground on the powerful Australian currency, lifting from A76.46c at 8am to A76.65c at 5pm. Market expectations are favouring a lift in interest rates tomorrow by the Reserve Bank of Australia.

ANZ bank said that with the NZ dollar near 10-year lows against the aussie, little scope was left for further depreciation.

Broadly, the NZ dollar was being pushed around by external factors with little to focus on domestically, ANZ said.

Technically the NZ dollar was at a critical juncture.

Key resistance at US74.40c had been tested. A convincing break would see the next resistance at US75.25c, and then US76.35c, ANZ said.

"There have been a number of times during the past year when the NZD has looked set to break higher but failed. This time the prospect looks a little more certain, but 'handle with care'."

BNZ strategist Mike Jones expected stiff resistance should the kiwi push toward the November 2009 high of US75.20c.

The NZ dollar against the greenback was starting to look overstretched on a fair-value basis, he said.

For the first time since last November the kiwi was above the fair-value range implied by BNZ's short term valued model of US72c to US74c.

The NZ dollar edged up to 62.09 yen at 5pm from 61.92 at 8am, and to 0.5400 euro from 0.5389. The trade weighted index was 66.63 at 5pm, the same reading as at 8am.

- NZPA