The New Zealand dollar closed on its lows today, with little news on the local front to stimulate buying.
At 5pm the kiwi was buying US70.35c from US70.66c at yesterday's close, having ranged between US70.33c and US70.58c during the session.
The US dollar inched higher, extending this week's gains as investors concluded that interest rates could rise regardless of the damage to the US economy caused by Hurricane Katrina.
"Traders are coming back to the US dollar as they realise that markets may have oversold the currency and pushed US Treasury yields too low on worries that the Katrina impact could hold the Fed back from lifting rates," a currency analyst said.
The kiwi also struggled against its Australian counterpart as a suprisingly strong employment report across the Tasman added fuel to the possibility of an interest rate rise there.
The Australian economy created 32,600 new jobs in August and the jobless rate held at a near 30-year low of 5.0 percent. The news of a 12th straight month of job gains stunned economists.
The impressive performance came hot on the heels of figures on Wednesday showing the Australian economy grew 1.3 percent in the second quarter, the best showing since late 2003.
The kiwi tumbled to A91.42c by 5pm, from A92.07c at yesterday's local close.
New Zealand is considered to be at the top end of the cycle with its 6.75 percent interest rate, while Australia's official interest rate is 5.50 percent.
The kiwi is still attracting some yield-related demand, however, with the Republic of Austria today issuing a $NZ250 million three-year eurokiwi bond. Eurokiwis are New Zealand dollar denominated bonds sold to European investors.
- NZPA
<EM>Currency:</EM> Kiwi sags against US and Aussie dollars
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