The New Zealand dollar recovered strongly today after it dipped below US62c overnight.
The kiwi ended today at US62.45c against its US61.81c overnight low and against US62.33c at yesterday's close.
ANZ bank chief dealer Murray Hindley said the kiwi had failed to break out of its recent range. However, merchandise trade data tomorrow, particularly if it is worse than anticipated, had the potential to knock it about, he said.
Also tomorrow, Australian inflation data could give a lead on whether the Australian Reserve Bank may finally be prompted to hike interest rates.
If those two events don't move the kiwi, then the Reserve Bank's commentary on the Official Cash Rate review on Thursday could. With inflation running at an annualised 6 percent, dealers are braced for a thoroughly hawkish statement.
Against the Australian dollar, the kiwi closed easier on A82.71c from A82.85c yesterday. The trade-weighted index rose to 62.85 from 62.67.
ANZ Bank said there was concern the market was already too heavily committed to Australian dollar strength.
Polls were showing no market participants predicting a NZ interest rate hike above the current 7.25 percent official rate on Thursday, while Australian consumer price index data tomorrow was forecast on the strong side, likely to lead to action by the Australian Reserve Bank in August.
The US dollar firmed as traders braced for key US economic data that could offer fresh clues about whether the Federal Reserve will pause its two-year campaign of tightening credit in August.
Traders said investors appeared to be more worried about the risk that the coming data would point to a solid economy.
That could rekindle expectations for a rate rise next month after comments from Fed Chairman Ben Bernanke last week signalled that US long-term inflation expectations were fairly contained, easing speculation of a rate hike pause.
"Some people in the market are realising that the course of the Fed's monetary policy still depends on data," said Hideki Hayashi, global strategist at Shinko Securities.
Gross domestic product data, due on Friday, is expected to show the US economy grew 3.0 percent in the second quarter, slowing from 5.6 percent growth in the first quarter.
The euro slipped to $US1.2620 from around $US1.2635.
- REUTERS
<i>Currency:</i> Dollar recovers strongly after overnight dip
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