The New Zealand dollar continued to puzzle the market today as to whether its next move is up or down.
By the local market's nominal 5pm close the kiwi was at US43.24c, almost level with yesterday's US43.23c close.
Local dealers said the unit oscillated between US43.15c and US43.58c during the session, driven by moves in the closely aligned aussie dollar.
"The aussie got sold off this morning and the kiwi with it," one currency dealer said.
"It was a thin trading day, not a lot of trading was struck between US43.40c and down to these levels. It sort of moved down here very rapidly.
"It is probably just a reflection of general aussie weakness," he said.
The Australian unit ended local trade at US51.91c against US52.07c late yesterday.
All eyes tonight would be on US import numbers and non-farm payroll data.
"If they are reasonably strong - if they have rebounded a little bit - showing interest rate cuts have had some effect, then it will be a US dollar story and the euro might peel back and drag the aussie and kiwi with it," the dealer said.
The euro was at US89.55c at 5pm (US88.87c).
Dealers picked the kiwi would trade between US43.90c and US44.40c tonight, ahead of that data.
In the medium term, the outlook for the kiwi remains finely balanced, with the odds stacked in the local unit's favour at the margin, the Bank of New Zealand said today.
The bank said in a commentary that it saw the New Zealand dollar climbing to almost US45c by year's end, and then continuing to appreciate by as much as 10 percent over the following 12 months.
"We are of the view that the USD is set for a major correction. To the extent that the Australasian currencies have suffered most at the hands of recent past USD appreciation, they may also stand to fare best in the case of any USD fall," BNZ said.
Factors in the kiwi's favour include interest rate differentials, a positive current account outlook, and the suggestion by purchasing power indicators that the New Zealand dollar is massively undervalued.
On the crosses at 5pm the kiwi was buying A83.30c (A82.97c at yesterday's close), 0.4830 euros (0.4861), 52.37 yen (52.07), 29.69 pence (29.67), 0.9444 marks (0.9510) and 0.7302 Swiss francs (0.7353).
The Australian dollar was buying around $NZ1.2006, slightly less than yesterday's close ($NZ1.2054).
The trade-weighted index was at 51.27 (51.30), 90-day bill yields were at 5.85 percent (5.86) and the monetary conditions index eased slightly to minus 653 (minus 648).
Among the bonds the March 2002s were at 5.74 percent (5.75), the April 2004s were 6.28 percent (6.33), the November 2006s were at 6.51 percent (6.55), and the November 2011s were at 6.64 percent (6.70).
- NZPA
<i>Currency:</i> Kiwi closes flat, continues to puzzle
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