The New Zealand dollar disappointed yesterday, failing to hold above the 44USc level it achieved during a busy overnight session.
"It promised a lot, but delivered little," one currency dealer said of the kiwi's efforts.
At 5 pm the kiwi was at 43.95c, down from 44.09c at 9 am, but above Tuesday's close of 43.52c.
Weaker than expected consumer confidence data released in the US overnight gave the euro a much-needed boost, which then flowed through to the local unit - with the kiwi outperforming all other currencies along the way.
"It was fairly well bid on the back of the euro's strength and that bad consumer number in the States," the dealer said.
"But a little bit of supply came through in the aussie in the afternoon and that dropped down and there was a bit of selling in the kiwi."
The big news is still to come, however, with US gross domestic product figures due out overnight, and the US Federal Reserve set to release its latest statement on interest rates this morning.
The Fed is widely expected to cut rates by half a percentage point from the current 6 per cent.
Dealers expected the kiwi to trade in a range of 43.80c to 44.10c before the GDP release.
"It is going to be pretty quiet and people aren't going to fire out any bullets until then anyway," the dealer said.
But beyond that, the result was less certain, with the market expected to favour the greenback at least in the short term, sending the kiwi down towards the 43.20c mark once again.
"Normally it [a rate cut] is not very positive from a currency perspective but they [US dealers] are just looking for an excuse to buy the greenback and US stocks at present," the dealer said.
But he expected the kiwi to come out tops in the longer term, extending its recent gains to around 47USc over the next three to six months.
"Our outlook in that period looks better than America anyway," he said.
At 5 pm, the aussie was at 54.69USc from 54.28c at Tuesday's close, while the euro was at 92.63USc from 91.74c.
- NZPA
<i>Currency:</i> Dollar fails to deliver
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