The New Zealand dollar firmed a little yesterday but a dose of the recent light volumes and tight ranges returned as people sat back to wait for Australasian central bank interest rate calls later this week.
The kiwi finished at 40.63USc (40.35c on Friday), trading in about a 10-point range.
A currency dealer said there was "no action" yesterday, and the kiwi simply softened as its Australian counterpart slipped back under 51USc.
"Generally people are a bit on tenterhooks on the kiwi and aussie with the cash reviews on Wednesday," the dealer said.
Though the market consensus is for no change in New Zealand's official cash rate, the dealer's bank expected a mild quarter percentage point cut, to 5.50 per cent.
Last week's economic data was positive for the kiwi until Friday's flat March quarter gross domestic product.
Possibly, that will soothe any Reserve Bank inflationary concerns, allowing it to ease monetary conditions.
"If we do get that it will be fairly positive for the kiwi and we may see a short-term run on it," the dealer said.
However, resistance is strong around 41USc, and any sustainable rally would need support from the aussie and euro.
The New Zealand dollar could get a boost from the euro, which tends to set the direction for the Australasians, if the European Central Bank cuts rates this week, the dealer said.
But most likely the ECB and Bank of England would decide to leave rates unchanged, fearful of inflation.
Over the weekend, the kiwi went as low as 40.12USc, its nadir since April.
Some analysts yesterday cut year-end expectations for the unit from 49USc to 45c.
The aussie finished locally at 50.97USc (50.67c).
On the crosses the kiwi was at 79.71Ac (79.65c), 50.61 yen (50.03), 28.71 pence (28.65), 0.9377 marks (0.9337), 0.7307 Swiss francs (0.7268) and 0.4795 euros (0.4775).
The trade weighted index was at 49.32 (49.03) and with the 90-day bills at 5.80 per cent (5.81) the monetary conditions index was at minus 853 (minus 880).
Among the bonds, the March 2002s were at 5.68 per cent (5.70); the April 2004s, 6.46 (6.43); the November 2006s, 6.66 (6.60); and the November 2011s, 6.82 (6.74).
- NZPA
<i>Currency:</i> Kiwi awaits interest rate calls
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