The New Zealand dollar travelled quietly today, exhibiting signs of the usual holiday lull despite a week of financial news ahead.
Volumes were light and the kiwi sank around 20 points during the day, closing at US41.74, just off its US41.75c close on Friday. It was picked to trade between US41.50-85c tonight.
One dealer estimated the kiwi's low this week would be around US41.30c.
"Given the weak growth figures that we've seen, and the push back of the recovery scenario that seems to be at the forefront of people's view at the moment, I think we're going to continue to see the kiwi weaken until the end of the year."
Another broker, ANZ Investment Bank senior dealer Richard Marshall, suggested the kiwi would struggle to break out of it recent US41.20-42.20c band.
Offshore currencies are expected to be the major driver this week, despite a number of financial announcements. They include Treasury's December Economic and Fiscal Update (Defu) on Tuesday afternoon, business confidence data on Wednesday, and September quarter GDP data on Friday. Monday next week will feature the current account figures for the September quarter.
Today's offshore markets were marked by a dramatic fall in the yen. It sank to three year lows against the US dollar, which peaked at 128.03 yen compared with 126.20 early Friday, after Japan's chief foreign exchange official signalled tacit acceptance of further weakness.
Since Japan is one of New Zealand's major trading partners, there are concerns its economic blues will have local effects. One broker said he did not believe that would happen, although "watching the yen continue to atrophy certainly won't help the kiwi".
Another key influence, the Australian dollar, was static throughout the day, closing weaker than its opening at US51.83c (US51.85)
It gained slightly against the kiwi during the day, buying $NZ1.2410 ($NZ1.2413) while the kiwi closed at A80.58c (A80.53).
On other crosses, the kiwi was trading at 53.39 yen (52.96), 28.73 pence (28.95), 0.9045 marks (0.9126), 0.6802 Swiss francs (0.6882) and 46.25 euros (46.64).
The trade-weighted index was at 49.96 (50.01), the 90-day bank bills were at 4.87 per cent (4.86) and the monetary conditions index eased to minus 881 (minus 876).
On the debt market, the March 2002 bonds were at 4.76 per cent (4.75 per cent), the April 2004s were at 5.62 per cent (5.54), the November 2006s were at 6.28 per cent (6.19) and the November 2011s were at 6.74 per cent (6.64).
- NZPA
<i>Currency</i>: Kiwi dollar prepares for early Christmas
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