The New Zealand dollar strengthened against all major currencies today from Friday's close.
Most of the move occurred in New York in Friday (Saturday NZ time) trading and was related to a generally weakening of the US dollar rather than local factors.
However, the kiwi strengthened against other currencies, particularly the Australian dollar.
The kiwi's move up was reinforced by labour cost data which showed wage and salary inflation continued to run strongly even though economists believe it may have peaked.
The kiwi closed on US62.65c from US61.97c at 5pm on Friday. It traded a narrow range today.
The kiwi was also up against the Australian dollar, euro and yen, buying A81.82c from A81.29c, 0.4866 euro from 0.4842, and 71.75 yen from 71.32. The trade-weighted index closed on 62.13 from 61.79.
ANZ bank said the break above US62.40c was important after a week of range trading.
According to Statistics New Zealand's classical measure of changes in pay rates for a fixed quality and quantity of labour, wages rose 0.7 per cent for the quarter and 3.3 per cent in the year.
That was pretty much in line with economists' forecasts. While there will be no quick relief for wage inflation, economists believe the worst may be over. From a currrency perspective though, today's data gave the Reserve Bank no reason to ease sooner than previously expected.
ANZ still felt the kiwi's rally against the Australian currency had more to run: A82.30c was a target.
"The AUD has a lot of good data priced in and the NZD doesn't," ANZ said.
The US dollar held near a two-month low against a basket of currencies after lacklustre US data cemented expectations that the Federal Reserve would not raise rates at a policy meeting this week.
Traders said that even if the Fed keeps rates unchanged, the dollar might not fall sharply unless the central bank signals that the two-year-old credit tightening campaign has reached an end.
"Concerns about high oil prices and inflation have not been dispelled," a Japanese trust bank trader said.
If the Fed "suggests that interest rates could be raised depending on the situation, it may become hard to sell dollars," he added.
Rates:
5pm today 5pm Friday
NZ dlr/US dlr US62.65c US61.97c
NZ dlr/Aust dlr A81.82c A81.29c
NZ dlr/euro 0.4866 0.4842
NZ dlr/yen 71.75 71.32
NZ dlr/stg 32.87p 32.86p
NZ TWI 62.13 61.79
Australian dollar US76.57c US76.23c
Euro/US dollar US1.2875 US1.2796
US dollar/yen 114.54 115.09
- NZPA
<i>Currency:</i> Dollar firms against major currencies
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