NZPA - The New Zealand dollar had an unspectacular day yesterday, with the positive news being it did not lose ground after the release of a weak confidence survey.
At 5pm the kiwi shrank slightly to US41.18c from US41.24c at yesterday's close, while the aussie dropped to US49.96c from US50.11c yesterday.
The bad news of the day was that a net 44 per cent of businesses surveyed after the September 11 attacks in the United States believed the economic situation would deteriorate, according to the Quarterly Survey of Business Opinion by the New Zealand Institute of Economic Research.
That compared with the last survey where a net 1 per cent of firms expected things to improve, but economists believed the massive drop in confidence - the biggest dive since June 1984 - was an overreaction.
The numbers add support to expectations of a cut in interest rates at the Reserve Bank's meeting next month.
The kiwi spiked to its intraday high of US41.37c moments after the release of the survey as a local bank started buying, one dealer said.
"There was an initial reaction, it wasn't anything that was worth noting ... even though the number was pretty poor it just so happened the (buying interest) came out at the same time as that occurred."
The kiwi settled down for the rest of the day, falling in the afternoon on the back of the aussie but it encountered some fairly good support around US41.10/15c.
"Overall a fairly quiet day. If the aussie hadn't come off I don't think we would have done a hell of a lot more," the dealer said.
The aussie was victim to stop-loss chasing across the Tasman.
"There seem to have been a few stops build up under US49.90c, which was the previous low for the last couple of days, so the market eyed those and had a crack at them, but they seem to have encountered a bit of buying around US49.89/90c."
He expected both southern dollars to trade around their lows overnight.
On the crosses at 5pm the kiwi was buying A82.43c (A82.18c at yesterday's close) 49.52 yen (49.70), 28.35 pence (28.26), 0.8826 marks (0.8826), 0.6693 Swiss francs (0.6696) and 0.4512 euros (0.4514).
The Australian dollar was buying $NZ1.2132 compared with $NZ1.2168 late yesterday.
The trade-weighted index was at 48.87 (48.92), while the 90-day bill yields were at 5.20 per cent (5.28). The monetary conditions index was at minus 957 (minus 946).
Among the bonds, the March 2002s were at 5.06 per cent (5.09), the April 2004s were at 5.34 per cent (5.35), the November 2006s were at 5.99 per cent (5.98), and the November 2011s were at 6.50 per cent (6.46).
- NZPA
<i>Currency:</i> Kiwi largely unmoved by dive in confidence
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