The kiwi enjoyed another solid day of trading and dealers are beginning to express confidence that New Zealand's currency is on a more permanent upswing.
At 5pm the kiwi was at US42.50c against the greenback, having traded between US42.42c and US42.72c during the day.
The Aussie was not so fortunate, as its currency still reverberated from negative job data released yesterday. It was trading at US51.40c and dealers said it could slip again to its overnight low of 50.90 on Thursday night before bouncing back over the next few days.
It also fell against the kiwi which was buying A82.66c (compared to yesterday's 82.19c). During the session the kiwi rose to a four month high of nearly A83c.
Today's tone was steady on mediocre volumes. However, sentiment for the kiwi was generally bullish, and not buoyed soley by good retail and job data this week.
"I think the most relevant thing is it's not so much an economic purchase, it's a supply and demand thing," said the dealer.
"If you look back at...the last two years, each time the economists have suggested the currency was going higher, we went lower because we had quite a bit of supply and didn't have so much demand.
"Now we're in the opposite position whereby we finally agree with what the economists are putting out, whereby we don't have as much supply as we have demand. I could foresee quite a big move to the topside from here."
The dealer said the kiwi had been "extremely bid" for the last two weeks and had reached a momentum which could carry on throughout the rest of the year.
"At moment, we have offshore investors who are all relatively positive, we have a lot of exporters who are needing cover on board and we have momentum type names now that will take over on the top side when we break out through...on the longer term charts, which we're doing now."
On the crosses at 5pm the kiwi traded at , 51.84 yen (52.55), 29.81 pence (29.99), 0.9316 marks (0.9412), 0.7174 Swiss francs (0.7239) and 0.4762 euros (0.4813). The Australian dollar was at $NZ1.2094 from yesterday's close of $NZ1.2167.
The trade-weighted index was at 50.65 (50.85), and with the 90-day bills at 5.83 percent (5.75) the monetary conditions index sagged a little to minus 716 (minus 697).
Among the bonds, the March 2002s were steady at 5.68 percent, the April 2004s were at 6.14 percent (6.13), the November 2006s were at 6.31 percent (6.30), and the November 2011s were at 6.47 percent (6.45).
- NZPA
<i>Currency:</i> Kiwi holds gains as confidence lifts
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