The kiwi traded in a very tight range today after strengthening overnight, unable to capitalise on growing uncertainty about the direction of the US dollar.
By 5pm the kiwi was at US55.45c compared with its US55.31c close yesterday, but almost unchanged from its 9am level of US55.43c.
The aussie was buying US60.46c against yesterday's US60.35c close.
Derek Rankin of Bancorp Treasury Services said the market was harbouring uncertainty about the US dollar as the US forces encountered stronger than expected fighting in Iraq.
"There was an expectation it would be a pretty clinical situation ... unrealistically, in fact. They thought with the weight of numbers and the technology it would defy the normal laws of waging a battle," Mr Rankin said.
"So the market had the idea it would all be over relatively quickly and it's now adjusting to the fact that it might be long, and drawn out, and problematic. That means the cost is going to be greater, the political fall-out is going to be longer and more intensive, and they're adjusting their values of the equity markets, the bond markets, and the currency markets as a result.
"The New Zealand dollar, the Australian dollar and the Canadian dollar have all done reasonably well because they're seen as safe, high-yielding investments ..." he said.
The kiwi traded in a narrow range today of US55.30/57c, and initial support is atUS55.10/20c, with resistance at US56c.
"The point is, it's pressurising upwards and still trading a range between US56c and US54c. At US54c there's good support, plenty of offshore interest looking to pick up the New Zealand dollar because the yield's so attractive."
In Tokyo today, the greenback won a brief reprieve on fresh buying by Japanese investors at the start of their new financial year, but sentiment remained depressed about the fighting and the US economy.
In Wellington at 5pm the US dollar was buying 118.25 yen, compared with 119.32 yen yesterday, while the euro strengthened to $US1.0913 ($US1.0826).
On the crosses at 5pm, the kiwi was buying A91.71 (A91.66c yesterday), 0.5080 euro (0.5109), 35.08 pence (35.09), 0.7503 Swiss francs (0.7543) and 65.60 yen (66.99).
The Australian dollar was buying $NZ1.0899 ($NZ1.0911).
On the money market, 90-day bills were at 5.82 per cent (5.83), the monetary conditions index was at plus 191 (198) and the trade-weighted index was at 60.73 (60.81).
Bonds yields were little changed after a big fall yesterday with the April 2004s at 5.43 per cent (5.42), the November 2006s at 5.50 per cent (5.48) and the November 2011s at 5.92 per cent (5.94).
- NZPA
<i>Currency:</i> Kiwi fails to capitalise on US dollar after rise overnight
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