The New Zealand dollar bounced back over US70c today following a volatile session dominated by speculators.
The kiwi traded as low as US69.37c as speculators sold the currency on the expectation that the break under US69.50c would gain momentum. But local players bought the currency back and the speculators were burnt as they scrambled to retrieve their short positions. Their stop loss buying saw the kiwi quickly regather US70.17c and end on US70.03c. It closed yesterday at US69.90c.
Westpac's foreign exchange sales manager Mike Burns said other than the speculative action, the kiwi was trading in inverse relationship to the US dollar. All eyes are on US jobs data due out tomorrow local time. A strong number was likely to see the resurgence of the US dollar gather pace and the kiwi retest below US69.50c. A weak number would see the reverse happen, Mr Burns said.
Earlier this week, the Federal Reserve gave a clear message that it was worried about inflation and suggested it would keep lifting US rates. A strong jobs number was likely to reinforce that view.
The bank's comments had seen the greenback spike higher, putting currencies such as the kiwi, aussie and euro under pressure.
The Australian dollar closed on US76.20c from yesterday's US76.40c.
The euro ended here at US$1.3192 (US$1.3265) and the greenback was at 104.92 yen (104.18).
The kiwi strengthened on all major crosses. At 5pm it was buying A91.92c from A91.50c yesterday, 0.5308 euro (0.5272), 37.29 British pence (37.12), 73.78 yen (72.85), and 0.8212 Swiss francs (0.8163).
The New Zealand dollar trade-weighted index closed at 68.23 (67.92), while the monetary conditions index was at plus 867 (844).
On the money markets, 90-day bank bill yields were static at 6.76 per cent, November 2006 bond yields fell to 6.36 per cent (6.39), July 2009s fell to 6.08 per cent (6.10), and April 2015s fell to 6.04 per cent (6.07).
- NZPA
<EM>Currency</EM>: Kiwi bounces back over us70c after volatile session
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