The New Zealand dollar traded in a tight range today after drifting lower during last night's offshore session.
By 5pm in Wellington the kiwi was at US58.30c from US58.94c late yesterday, while the aussie was buying US66.06c (US66.66c last night).
"The kiwi got hit down pretty hard overnight as did the euro and the aussie dollar", ANZ Investment Bank's Mark Elliott said.
However, Mr Elliott said the kiwi's fall overnight was more related to the yen than the US Federal Reserve's rate announcement early this morning New Zealand time.
"There was weakening of the dollar -- strengthening of the yen that started late our time yesterday.
"As the yen started strengthening it caused a lot of unwinding particularly of yen cross-rate positions -- euro-yen, sterling-yen, swiss-yen.
"As the euro weakened on that cross-rate unwinding, the kiwi and aussie started unwinding as well."
Today the kiwi traded in a US58.35c to US58.52c range, and although he didn't have a strong view , Mr Elliott speculated it would trade between US58.10c to US5850c tonight.
In Wellington at 5pm, the euro was at US$1.1158 (US$1.1309 last night), and the US dollar was buying 116.16 yen (117.13).
On the crosses at 5pm the kiwi was at A88.23c (A88.42c last night), 67.68 yen (69.05), 36.69 pence (36.72), 0.8116 Swiss francs (0.8129), and 0.5223 euro (0.5211).
The Australian dollar was buying $1.1330 ($1.1310).
The monetary conditions index was at plus 254 (291), the trade-weighted index was at 62.34 (62.78) and 90-day bank bill yields were at 5.16 per cent (5.17).
The February 2005 yields were at 5.34 per cent (5.32), the November 2006s were at 5.57 per cent (5.57), and the November 2011s were at 5.92 per cent (5.88).
- NZPA
<i>Currency:</i> Dollar trades lower as Yen strengthens
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