The kiwi failed to capitalise on a widespread sell-down of the United States dollar ahead of US President George Bush's state of the nation address this afternoon, NZ time.
In his speech which also touched on economic and other issues, President Bush braced Americans for a possible war with Iraq by saying Baghdad has shown contempt for United Nations disarmament demands
One local dealer said the kiwi had been relatively subdued ahead of the speech before joining the greenback sell-down.
"Basically the US dollar got sold off against almost every currency (ahead of the speech), but from there (kiwi's) lost most of the ground that it did make," the dealer said.
"We've seen a bit of two-way action. The kiwi range for the day has been US54.55/77c."
The kiwi was likely to test its current support of US54.50c, possibly trading as low as US54.00c depending on market reaction to the US dollar tonight.
"If we get a little bit of a move lower, it's probably going to be enough to see a big move lower, so US54.50c is quite a major support on the downside. I'd say that's going to be tested - whether it's going to break or not is a hard call," he said.
The local currency did not react to trade figures this morning showing a wider than expected preliminary trade deficit of $299 million.
"Kiwi hasn't really be reacting to data for the last little while, it's been relatively removed from the economic front."
In New York earlier today, the greenback was helped by Treasury Secretary nominee John Snow's affirmation of a "strong dollar" policy.
In Wellington at 5pm the euro was at $US1.0853, a gain on last night's $US1.0836. Against the yen, the greenback was trading at 118.28, down from 118.43 yen last night.
By 5pm the kiwi was at US54.60c, an improvement on last night's close of US54.56c but down on US54.72c this morning.
The aussie's momentum stalled on world growth concerns, pushing it down to US58.85c (US58.98c yesterday) and helping the kiwi strengthen on the trans-Tasman cross to A92.79c (A92.55c).
New Zealand's trade-weighted index was little changed at 59.98 (59.97), 90-day bank bills were flat at 5.84 per cent, and the monetary conditions index was steady at plus 130.
Against other major currencies the kiwi was at 0.5031 euro (0.5035), 64.59 yen (64.60 yen), 33.20 pence (33.37), and 0.7385 Swiss francs (0.7391).
The Australian dollar was buying fewer kiwi dollars at $NZ1.0778 ($NZ1.0802).
On the debt market the April 2004 government bonds were at 5.46 per cent (5.49), the November 2006s were at 5.63 per cent (5.67), the November 2011s were at 5.95 per cent (5.99), and the April 2013s were at 5.99 per cent (6.02).
- NZPA
<i>Currency:</i> Kiwi fails to capitalise on greenback sell down
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