KEY POINTS:
The New Zealand dollar took a short, sharp dip after weaker-than-expected retail sales data were released today but it rebounded almost as quickly as it fell.
It closed on US75.06c having dipped a third a cent from that level after the data. It closed yesterday at US75.03C.
The kiwi also suffered little from the Reserve Bank of Australia signalling inflation and wages were lower than expected which may mean rates will remain on hold for the rest of the year.
Economists cautiously welcomed the 1.2 per cent slump in retail sales during April as a hopeful sign in the fight against inflation.
An ANZ bank economist said on the face of it, today's data was an early indication of softening activity.
But the economists were wary of reading too much into the figures yet, with the April data likely to represent some statistical payback following the surprisingly strong increases in the preceding two months, rather than general underlying weakness.
ANZ Bank said demand from Asian investors had provided a base of support for the kiwi.
It said the strength of the kiwi was somewhat surprising given traditional sell factors, such as higher US yields, falling risk appetites and increased volatility.
Those all suggested the NZ dollar should face some strong headwinds.
Against the Australian dollar, the kiwi strengthened to A89.55c from A89.24c. The trade weighted index closed on 73.33 from 73.21.
ANZ said positioning of offshore participants looking for a large and sustained fall in the kiwi cross against the aussie was currently preventing it taking place.
The US dollar hovered near a 4-1/2-year high against the yen and an 11-week high versus the euro, supported by a jump in US benchmark yields to five-year peaks and a recovery in stock markets.
Surging US interest rates over the past month on an upbeat outlook for the economy have stoked demand for dollar-denominated securities, with the Federal Reserve now expected to keep interest rates on hold.
Reuters currency rates:
4.30pm today 5pm yesterday
NZ dlr/US dlr US75.06c US75.02c
NZ dlr/Aust dlr A89.55c A89.24c
NZ dlr/euro 0.5638 0.5638
NZ dlr/yen 92.15 91.70
NZ dlr/stg 38.05p 38.02p
NZ TWI 73.33 73.21
Australian dollar US83.81c US84.07c
Euro/US dollar 1.3311 1.3304
US dollar/yen 122.77 121.22
- NZPA