The New Zealand dollar plummeted about half a US cent yesterday but made up most of the lost ground by the end of the day.
By 5pm the kiwi was at US46.86c, from a low of US46.55c during the day and down from Tuesday's close of US47.07c.
The aussie had eased to US54.64c from US54.92c Tuesday night.
"There was selling out of Asia but (the kiwi) bounced back pretty well," one local dealer said.
"The aussie didn't break through its lows, and then a few buyers emerged ... and I think the market might have been caught a little bit short on the move down.
"We've (since) had a bit of a squeeze up to US46.90c."
He expected the kiwi to trade between US46.65/95c overnight, with good support.
"I think US46.90/95c might be a bit of a top and it's all eyes on the aussie - if it can break through its lows on Tuesday night of US54.50c, the kiwi should move back down," he said.
In offshore trade, the US dollar struggled in Asia after a fall in US share prices and weaker-than-expected US output data hurt sentiment.
Overnight, the market will be looking for further clues about the US economy in August consumer prices, August real earnings and July international trade data to be published yesterday.
The euro was buying US97.36c from Tuesday night's local close of US96.60c, while the greenback was worth 121.98 yen (122.76).
On the crosses in Wellington at 5pm, the kiwi traded at A85.79c (A85.73c at Tuesday's close), 57.16 yen (57.79), 30.38 pence (30.62), 0.7073 Swiss francs (0.7173), and 0.4814 euro (0.4872).
The aussie was buying $NZ1.1658 ($NZ1.1665).
On the money market, 90-day bills were unchanged at 5.88 per cent, the trade-weighted index was at 53.93 (54.31) and the monetary conditions index was at minus 397 (minus 362).
The April 2004 bonds were at 5.62 per cent (5.72), the November 2006 bonds were at 5.93 per cent (6.06), and the November 2011 bonds were at 6.12 per cent (6.25).
- NZPA
<i>Currency:</i> Kiwi down half a US cent, claws back some ground
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