The New Zealand dollar made a strong recovery today after heavy losses yesterday and, by the close, was nudging US65c again.
Heavy selling of the kiwi against the yen and the Australian dollar yesterday was reversed today.
The kiwi closed on US64.93c from US64.44 24 hours earlier.
Against the aussie, the kiwi ended on A84.44c from A83.60c, continuing volatile trading on that cross, and it rose on other major crosses as well. The TWI rose to 64.74 from 64.10 at yesterday's close.
Weaker than expected Australian GDP propelled the kiwi cross rate higher. GDP rose just 0.3 percent in the second quarter, well below market forecasts of a 0.7 percent gain. The annual rise was just 1.9 percent.
Earlier, Australia's central bank left interest rates unchanged at 6.0 percent as expected. The low GDP number put less pressure on the Reserve Bank of Australia (RBA) to hike rates in future.
"We suspect the Reserve Bank will wait to see what the third quarter CPI shows and, if that's high again, that will give it a free pass to hike if it wants to," said Rory Robertson, interest rate strategist at Macquarie Bank.
ANZ Bank chief dealer in New Zealand Murray Hindley said there may have been an overreaction yesterday to comments from Standard & Poor's that New Zealand's credit rating could be under threat due to its high current account deficit.
He said there was plenty of support for the kiwi from Japan today where investors seem still to want to chase yields.
Tomorrow's Australian employment data would probably tell which way the kiwi moved in the near term, Mr Hindley said.
The US dollar and the euro recovered on short covering.
Solid Japanese capital spending data led players to trim huge yen short positions that had been built in part on a bearish outlook on the economy after softer-than-expected consumer prices data for July.
Rates:
5pm today 5pm Tuesday
NZ dlr/US dlr US64.93c US64.44c
NZ dlr/Aust dlr A84.44c A83.60c
NZ dlr/euro 0.5065 0.5020
NZ dlr/yen 75.63 74.62
NZ dlr/stg 34.28p 34.22p
NZ TWI 64.74 64.10
Australian dollar US76.85c US77.05c
Euro/US dollar 1.2815 1.2837
US dollar/yen 116.45 115.79
- NZPA
<i>Currency:</i> Dollar heads back up towards US65C
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