The New Zealand dollar recovered a little of this week's lost ground, clawing its way back over US68c.
At 5pm it was fetching US68.19c, from US67.68c at 5pm yesterday.
The US dollar pared its gains after earlier climbing to a two-year high against the euro. The dollar was propelled by bullish sentiment that caused investors, who had bet against the US currency, to buy it to trim their losses.
Expectations of higher US interest rates relative to the euro zone pushed the euro to a low of $US1.1711 before it recovered to $1.1765.
The euro's swift move overnight to below $US1.1747, the currency's launch rate in 1999, had caught many euro bulls by surprise, forcing them to cover their bets against the dollar, traders said.
The kiwi dollar was underpinned by yesterday's labour cost and wage data that showed pressure on wage rates was higher than expected, with the Labour Cost Index (LCI) of private salaries and wages up 0.8 percent in the September quarter, and 2.8 percent for the September year.
The data increases pressure on the Reserve Bank to continue to raise rates. The bank had already been expected to hike interest rates again next month to try and contain annual inflation of over 3 percent.
BNZ currency strategist Sue Trinh said the possibility of the official cash rate hitting 7.25 percent in December suggested the kiwi would continue to enjoy yield related support in the short term.
Yield continues to be a big drawcard for investors with another uridashi (New Zealand dollar demoninated bonds) worth $223 million issued overnight.
The Australian dollar closed at US73.38c compared with its US72.98c close yesterday while the kiwi cross rate rose to A92.92c from A92.75c.
The following are Reuters currency rates:
NZ dlr US68.19c US67.68c
NZ dlr/Aust dlr A92.92c A92.75c
NZ dlr/euro 0.5794 0.5773
NZ dlr/yen 79.97 79.75
NZ dlr/stg 39.12p 38.94p
NZ TWI 70.59 70.30
Australian dollar US73.38c US72.98c
Euro/US dollar US1.1778 US1.1728
US dollar/yen 117.28 117.76
- NZPA
<EM>Currency:</EM> Kiwi pokes head over US68C
AdvertisementAdvertise with NZME.