Consolidation was the buzz word in the New Zealand currency market yesterday.
By 5pm the kiwi had eased to US48.58c from US48.80c at Friday's close, while its Australian stablemate was at US56.12c (US56.54c).
"It's been a very quiet start to the week here for both the kiwi and the aussie," Bank of New Zealand currency strategist Stu Ritson said.
"After the extreme volatility of last week people are just happy to take a bit of a breather.
"We had some very large moves last week and this week we have July 4 (Independence Day in the United States) so there is potentially going to be less volatility and less interest in forex markets in general."
Mr Ritson expected the local unit to range between US48.30c and US48.70c overnight.
"The uptrend is intact, but kiwi is taking a breather basically - which is healthy. Positions and expectations got skewed too much to the top side and this is just a correction of that over-exuberance," he said.
Key events this week include possible interest rate rises by the Reserve Bank and Australia's central bank, both on Wednesday.
Here, 11 out of 12 forecasters polled by Reuters expect the RB to hike the Official Cash Rate by 25 basis points to 5.75 perc ent, removing the last of the 100 basis points of "insurance" taken out after the September 11 attacks on the United States.
On the crosses at 5pm the kiwi was buying A86.57c (A86.32c at Friday's close), 58.02 yen (58.54), 31.70 pence (31.95), 0.7188 Swiss francs (0.7269) and 0.4888 euro (0.4935).
Against the kiwi, the aussie was buying $NZ1.1549 ($NZ1.1585).
On the money market 90-day bills were at 6.04 per cent (6.00), the trade-weighted index weakened to 55.20 (55.45) and the monetary conditions index eased to minus 266 (minus 247).
On the debt market the April 2004 bonds were at 6.06 per cent (6.05), the November 2006 bonds were at 6.44 per cent (6.43), and the November 2011 bonds were flat at 6.65 per cent (6.65).
- NZPA
<i>Currency:</i> Kiwi consolidates in light trade
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