The New Zealand dollar firmed against all currencies today in featureless trade after a choppy overnight session.
Having risen above US66c overnight, it opened at US65.78c and closed at US65.92c compared to US65.58c yesterday.
ANZ said that while the kiwi's attempt to hold above US66c failed, support on the downside had also undergone a test as the NZ dollar came within a whisker of US65.40c overnight before finding demand from yield hunters.
Against the Australian dollar the kiwi rose to A87.48c from A87.36c at 5pm yesterday while the trade-weighted index ended the day at 66.69 from 66.51.
Comments today from Finance Minister Michael Cullen that he had told Moody's ratings agency there would be no change in the Government's tight fiscal policy, helped allay fears of a fiscal easing.
In reply to a question in parliament, Dr Cullen confirmed he had met with Moodys the previous day, and that the issue of tax cuts had been raised.
"What they wanted to know was that there was going to be no lurching around in the government's fiscal policy and I was able to give them that assurance," he said.
He said any tax cuts would be measured because of the size of the country's current account deficit, which hit 9.7 per cent of gross domestic product in the second quarter.
The market was looking towards third-quarter inflation data and the Reserve Bank's official interest rate decision, both next week.
In the majors, the US dollar steadied after falling on profit-taking, as investors turned to inflation and capital flows data due later in the session for clues on whether the currency has room to rise further.
Traders also kept a close eye on media reports that US spy satellites had detected activity that may signal North Korea is preparing for another nuclear test.
Traders said the dollar remained well-supported on signs the US economy may not be slowing as fast as some had thought, leading to reduced market expectations that the Federal Reserve will cut interest rates early next year.
"The dollar is poised to rise, given a lack of incentives to push the yen higher," said a trader at a Japanese bank.
The euro was nearly flat on the day at US$1.2535 after having hit US$1.2484 on Friday, the weakest since July. The dollar was little changed on the day at 119.05 yen, off the 10-month high of 119.88 yen struck on Friday.
Some market players said the US currency would likely struggle to rise above key resistance at 120 yen, due to exporter sales and protection of option barriers just below that level.
Rates:
5pm today 5pm Monday
NZ dlr/US dlr US65.92c US65.58c
NZ dlr/Aust dlr A87.48c A87.36c
NZ dlr/euro 0.5260 0.5244
NZ dlr/yen 78.50 78.49
NZ dlr/stg 35.41p 35.36p
NZ TWI 66.69 66.51
Australian dollar US75.41c US75.01c
Euro/US dollar 1.2537 1.2503
US dollar/yen 119.03 119.70
- NZPA
<i>Currency:</i> Dollar firms after trading tight range
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