The New Zealand dollar drifted higher yesterday as the Melbourne Cup brought business to a standstill across the Tasman.
At 5pm the kiwi was at US41.75c from US41.55c at Monday's close, having traded as high as US41.83c throughout the day.
The Australian dollar was also higher, closing locally at US51.07c (US50.85c late yesterday).
"(Kiwi) has really just drifted higher today from a little bit of exporter buying and then was sold in the last 10 minutes of trade out of Australia which has driven it back below US41.80c," Citibank's Dean Sheridan said.
"Obviously it has been relatively quiet with the Melbourne Cup action going on."
Overnight, dealers would be steeling themselves for the US Federal Reserve's announcement on interest rates, set for release at 7.15am NZT. The Fed is expected to slash rates for the tenth time this year, lowering the federal funds target by half a percentage point to 2 percent - a four-decade low.
The kiwi would likely range between US41.60c and US41.90c ahead of that announcement, dealers said.
The Australian Reserve Bank meets a few hours later and is expected to lower its key rate by 25 basis points to 4.25 percent, just days out from the country's federal election.
On the cross rates at 5pm, the kiwi was buying A81.76c (A81.72c at yesterday's close), 46.55 euro (46.25), 50.75 yen (50.56), 28.63 pence (28.52p), 91.03 marks (90.45), and 68.52 Swiss francs (68.05). The Australian dollar was buying $NZ1.2232 against $NZ1.2237 yesterday.
The trade-weighted index was at 49.66 (49.46), and the Monetary Conditions Index was at minus 907 (minus 925).
With expectations that New Zealand's Reserve Bank will follow suit on interest rate cuts next week, the money market is already pricing in a 50 basis point cut.
The 90-day bank bills - which usually move in tandem with the official cash rate - ended today at 4.91 per cent (4.92 per cent), the March 2002 bonds were steady at 4.81 per cent, the April 2004s were 5.06 per cent (5.09), the November 2006s were at 5.58 per cent (5.62), and the November 2011s were at 6.07 per cent (6.12).
- NZPA
<i>Currency:</i> Kiwi ends higher as Aussies eye Melbourne Cup
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