KEY POINTS:
The New Zealand dollar eased a little in uneventful trading today as the US dollar staged a mild recovery.
Substantial bond issuance in New Zealand dollar denominated bonds supported the kiwi.
At 5pm today it was buying US69.07c, after a bounce back yesterday from a one-month low of US68.40c had taken it to a close of US69.25c.
The New Zealand dollar was buying A88.53c from A88.50c at 5pm yesterday, and the trade weighted index was at 68.64 from 68.63.
The US dollar rose to six-week highs against the euro as investors continued to buy back the currency on receding expectations the Federal Reserve will lower interest rates in coming months.
The dollar resumed its climb against major currencies, particularly the euro, after last week's robust jobs data and other recent economic data strengthened views that the Federal Reserve was unlikely to cut rates any time soon.
A sharp drop in oil prices -- which could help bolster US consumer spending -- and selling in emerging equities markets triggered by a Venezuelan plan to nationalise some of the country's major utilities also lent support to the dollar, traders said.
Overnight issuance of nearly $1 billion in uridashi and eurokiwi (NZ dollar denominated bonds sold to Japanese and European investors) helped cement the Kiwi dollar above US69c.
Other demand for the kiwi from local exporters and potential mergers and acquisition activity should ensure the local currency remained supported for now, ANZ Bank said.
Uridashi and Eurokiwi issuance announced so far this month already totals $1.2 billion, well in excess of the $803m scheduled to mature in January.
BNZ currency strategist Danica Hampton said despite the recent "real-money" appetite for the New Zealand dollar, with the speculative community deeply invested in New Zealand dollars, BNZ expects the topside in the NZD/USD to be limited.
"Indeed, while Asian funds and Japanese investors remain comfortable taking profits on carry trades like NZD/JPY, the NZD will remain vulnerable to further losses.
"However, we are not expecting the NZD to completely fall out of bed, as we do not think the recent changes in the fundamental outlook are substantive enough to warrant a major deterioration in 'carry trade' sentiment."
Reuters currency rates:
5pm today 5pm yesterday
NZ dlr/US dlr US69.07c US69.25c
NZ dlr/Aust dlr A88.53c A88.50c
NZ dlr/euro 0.5326 0.5312
NZ dlr/yen 82.38 82.33
NZ dlr/stg 35.67p 35.65p
NZ TWI 68.64 68.63
Australian dollar US78.01c US78.27c
Euro/US dollar 1.2970 1.3036
US dollar/yen 119.28 118.90
- NZPA