The New Zealand dollar is likely to find few friends this week if it drops below US41.50c, with at least one currency dealer expecting it to revisit the low US40c level by the end of the week.
At 5pm the kiwi traded at US41.85c, compared with US41.83c at Friday's close, while the aussie closed at US51.34c, around the middle of its range, from US51.43c on Friday.
ANZ Investment Bank currency dealer Mark Elliott said the kiwi opened at US41.80c, and ranged between US41.69/85c to start off the week.
"It pretty much followed the fortunes of the aussie, although we seem to have good exporter buying around the US41.70c mark.
"We saw some selling interest from US investment banks, and my bet is that (the kiwi) is looking a little shaky. We'll probably see it lower over the next few days, possibly quite considerably if we break through this US41.50/70c level," Mr Elliott said.
"I think quite possibly it's setting itself up for a fairly large fall, maybe down into the low US40c, it could go 100 points or so (during the week). If we get through the US41.50c level I don't think there's much support beneath it.
"It won't be anything local that drives it down, it will be other currency interrelationships, more likely what happens to the aussie or US dollar," he said.
Thursday is the most significant day this week for local data, with the December quarter Producers Price Index, January merchandise trade figures and the National Bank Business Outlook due out.
Offshore, the greenback was a touch softer yesterday as traders kept a low profile ahead of a week rich with economic data and events, including US fourth quarter gross domestic product numbers on Thursday.
On the crosses at 5pm the kiwi held firm against its Australian counterpart at A81.46c (A81.45c at Friday's close), while the aussie was buying $NZ1.2266 ($NZ1.2358).
Against the other major currencies the kiwi lost ground to trade at 55.98 yen (56.13), 29.24 pence (29.31), 0.7077 Swiss francs (0.7106), and 0.4785 euro (0.4819).
The trade weighted index was at 51.00 (51.02), the monetary conditions index was at minus 767 (minus 764), and 90-day bank bills were at 4.97 per cent (4.98).
On the debt market, the March 2002 bonds were unchanged at 4.74 per cent, the April 2004 bonds were at 5.61 per cent (5.62), the November 2006s were at 6.27 per cent (6.32), and November 2011s were at 6.52 per cent (6.57).
- NZPA
<i>Currency:</i> Kiwi holds steady
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