KEY POINTS:
The New Zealand dollar rebounded against an emasculated US dollar today, but it lost ground against other currencies.
The kiwi closed on US74.30c compared with its US73.85c yesterday.
The greenback hit a new record low against the euro as a surprise plunge in US consumer confidence to nearly two-year lows raised expectations of another Federal Reserve interest rate cut next month.
Another report showed sales of existing US homes slipped 4.3 per cent in August, a sign of yet more weakness in the housing market.
"The housing data confirmed what we already know, but the confidence number at a two-year low is a concern. It highlights that there's been a shift in the consumer outlook, and that will be important for the Fed," said Camilla Sutton, currency strategist at Scotia Capital in Toronto.
Bank of New Zealand currency strategist Danica Hampton said the NZ dollar was battered during the European session, with hedge fund names noted as aggressive sellers.
Kiwi dollar sentiment was affected by the pressure the British pound was under yesterday and "the stampede of the lemmings" was evident as leveraged traders rushed to the same exit door to dump carry positions, she said.
While some locals had taken advantage of the weakness and provided some support, it was the New York market's bias to sell US dollars across the board that had sparked the kiwi's rebounded.
Against the euro, the NZ dollar held largely steady at 0.5247, but against the Australian dollar it fell to A85.09c from A85.47c.
The trade-weighted index rose to 69.96 from 69.86 yesterday.
In contrast to the US, local consumer confidence inched up in the September quarter, boosted by rising dairy farmer incomes and despite a rash of bad news such as finance company collapses.
The index rose to 113.5 from 111.4 in the June quarter, following two consecutive quarterly declines. An index reading above 100 indicated optimists outnumbered pessimists.
Westpac chief economist Brendan O'Donovan said the result showed there was more life yet in consumer spending and as a result the Reserve Bank was likely to keep interest rates higher for longer, propping up the kiwi.
Reuters currency rates
4.30pm today 4.30pm yesterday
NZ dlr/US dlr US74.30c US73.85c
NZ dlr/Aust dlr A85.09c A85.47c
NZ dlr/euro 0.5247 0.5251
NZ dlr/yen 85.30 84.83
NZ dlr/stg 36.81p 36.72p
NZ TWI 69.96 69.86
Australian dollar US87.28c US86.49c
Euro/US dollar 1.4152 1.4078
US dollar/yen 114.86 114.78
- NZPA