The New Zealand dollar continued to drift lower today in the face of a stronger greenback.
At 5pm today the kiwi was buying US70.93c against US71.30c at 5pm yesterday having traded in a US70.84c to US71.05c range today.
The kiwi softened overnight after the European Central Bank kept its key interest unchanged at 2 percent. Coming just a day after the United States Federal Reserve raised its key interest rate by 25 basis points to 2.5 percent, it placed the market's focus on the trans-Atlantic interest rate differential in favour of US dollar-denominated assets over euro-denominated assets.
Although the kiwi slipped overnight, in today's trading BNZ currency strategist Sue Trinh said the market was reluctant to push it too strongly either up or down. Traders were playing wait and see in the lead up to two key risk events -- the release of US non-farm payroll data late tonight and the G7 meeting this weekend.
A strong payroll reading would likely reaffirm the Federal Reserve's commitment to raising interest rates, further boosting the US dollar, traders said.
Economists expect the data to show an increase of 190,000 jobs, compared with 157,000 in December.
This weekend's G7 meeting is now not expected to produce an announcement from China on its currency peg. Officials have suggested the group will not change its previous language about the need for flexible foreign exchange regimes.
Ms Trinh said if the payrolls data and G7 meeting panned out as expected both would be US dollar positive.
"So the risk for the kiwi as we start Monday morning is going to be to the downside. However there's key support at that US70.80c area, and that's held for the last couple of weeks," she said.
If that gave way Ms Trinh said the kiwi could fall back towards the low US70s range.
At 5pm today, the greenback was at 104.48 yen (104.14 at 5pm yesterday), the euro was at $US1.2966 ($US1.3024) and the aussie was buying US76.88c (US77.58).
On its major crosses, the kiwi was at A92.27c (A91.93c), 0.5470 euro (0.5476), 37.71 British pence (37.71), 74.10 yen (74.26), and 0.8533 Swiss francs (0.8524).
The Reserve Bank of New Zealand's monetary conditions index was at plus 944 (951), while the trade weighted index (TWI ) was at 69.25 (69.34).
On the money markets, 90-day bank bill yields were unchanged at 6.79 percent, November 2006 bond yields were at 6.31 percent (6.32), July 2009s were at 6.06 percent (6.07) and April 2015s were at 5.94 percent (5.97).
- NZPA
<EM>Currency:</EM> Kiwi softens, but remains within ranges
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