The "correction" of the New Zealand dollar continued apace today with consumer price index data giving the kiwi's recovery fresh impetus.
The kiwi, which gained 1.9 per cent last week following its battering in March, closed on US$63.21c from US62.65c at local close yesterday.
ANZ Investment Bank chief dealer Murray Hindley said there was a good chance the recovery would continue with US63.50c the next likely stopping point.
"It's held its gains well and there's half a chance it may correct a little further," he said.
CPI data showing inflation rose to 3.4 per cent in the March year from 3.2 per cent in the December year, had economists cautioning that interest rate cuts slated for September may be delayed. Such a hold-up was likely to underpin the kiwi.
However, its rise was against a weakening US dollar where traders are counting on an end to the US tightening phase soon.
The US dollar hit a seven-month low against the euro, extending losses made after minutes of the Federal Reserve's March meeting suggested the central bank was close to ending a two-year run of raising interest rates.
Amid a broad sell-off, the dollar also slipped to a fresh three-month trough versus the Swiss franc, stung by the minutes of the Fed meeting as well as softer-than-expected data for US producer prices and housing starts.
"The immediate trigger was the Fed's minutes, but sentiment has already been bearish for the dollar in recent weeks," said Tatsuro Karitani, senior trader at Mizuho Corporate Bank, who also cited concerns about tension over Iran's nuclear ambitions.
The minutes from the March 27-28 policy meeting said: "Most members thought that the end of the tightening process was likely to be near, and some expressed concerns about the dangers of tightening too much, given the lags in the effects of policy."
The Australian dollar firmed to US74.22c from US73.90c yesterday while the kiwi cross rate rose to A85.16c from A84.79c.
The New Zealand dollar trade-weighted index rose to 64.39 from 64.09.
Rates:
5pm today 5pm yesterday
NZ dlr US63.21 US62.65c
NZ dlr/Aust dlr A85.16c A84.79c
NZ dlr/euro 0.5117 0.5110
NZ dlr/yen 73.91 73.85
NZ dlr/stg 35.48 35.35p
NZ TWI 64.39 64.09
Australian dollar US74.22c US73.90c
Euro/US dollar US1.2323 US1.2263
US dollar/yen 116.98 117.84
- NZPA
<EM>Currency:</EM> Dollar 'correction' continues
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