KEY POINTS:
The New Zealand dollar reclaimed US76c today as the US dollar dropped on speculation the Federal Reserve would cut rates again.
Weak US housing data and speculation Middle East oil exporters may review their US dollar pegs to combat inflation also depressed the greenback.
Kiwi trading was whippy as speculative sellers ran into heavy yield demand. It closed on US76.15c against US75.18c at the same time yesterday.
The US dollar hovered near a record low against the euro after the Fed said US growth would likely slow in 2008, underscoring market expectations for more monetary easing.
The Fed projected US economic growth will slow in 2008 to between 1.8 per cent and 2.5 per cent, down sharply from the 2.5 per cent to 2.75 per cent forecast in June.
US interest rate futures implied investors see a roughly 90 per cent chance that the Fed will cut interest rates by one-quarter point to 4.25 per cent on December 11.
That has put the high yield currencies back in vogue but worries about credit risk and ongoing risk in equities markets was holding them back.
The kiwi also made gains on the yen, rising to 83.86 from 82.55.
Against the Australian dollar, the kiwi was buying A85.86c, slightly above the A85.62c at 5pm yesterday.
ANZ said upcoming elections in Australia had clearly delivered gains for the NZ dollar.
The aussie may start to strengthen against the kiwi after this weekend when the uncertainty of the election is over, the bank said.
The trade weighted index closed on 69.99 from 69.53.
Reuters currency rates
5pm today 5pm yesterday
NZ dlr/US dlr US76.15c US75.18c
NZ dlr/Aust dlr A85.86c A85.62c
NZ dlr/euro 0.5135 0.5132
NZ dlr/yen 83.86 82.55
NZ dlr/stg 36.85p 36.70p
NZ TWI 69.99 69.53
Australian dollar US88.71c US88.83c
Euro/US dollar 1.4830 1.4649
US dollar/yen 109.65 109.74
- NZPA