The New Zealand dollar ended the day almost where it started this morning against the United States dollar after having rallied more than a cent overnight.
The kiwi closed at US70.53, compared with US69.50c at last night's local close.
Data showing slower growth in US factory activity, coupled with damage from Hurricane Katrina, fuelled speculation about a pause in the Federal Reserve's interest rate rises which had previously been supporting the US dollar.
The US currency fell to three-month lows against the euro, pound and Swiss franc, while rising commodity prices added further support to the Aussie and other commodity currencies.
Hurricane Katrina has damaged crucial oil and grains infrastructure in the United States, prompting speculation that commodity-exporting nations could benefit.
Spiros Papadopoulos, senior markets economist at National Australia Bank said interest-rate dynamics were for now less supportive of the US dollar.
The risk of a poor US payrolls number on Friday could add to pressure on the US dollar.
In Wellington, the euro closed on US$1.2486 compared to US$1.2332 yesterday, while the greenback slipped to 109.87 yen from 110.81.
On its crosses, the kiwi was buying A92.34c (A92.09c), 0.5647 euros (0.5638), 0.8711 Swiss francs (0.8720), 38.47 British pence (38.58) and 77.47 yen (77.03).
The New Zealand dollar trade-weighted index ended on 70.34 (69.88) and the monetary conditions index on 1047 (1014).
On the money market, 90-day bank bill yields closed on 7.05 per cent (7.04). July 2009 bond yields closed on 5.56 per cent (5.61), while the April 2015 yields fell to 5.57 per cent (5.61).
- NZPA
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