The New Zealand dollar was suppressed by aussie dollar weakness yesterday which prevented either currency from taking advantage of a softer greenback overnight from Monday.
The kiwi dollar initially traded heavily after some selling in Europe.
"The market was sort of caught long here this morning," said Westpac currency dealer Basil Payn yesterday.
It slipped during the day to US49.13c, closing near the middle of its range at US48.30c, down from Monday's close of US49.45c.
In comparison, the Australian dollar ran through a support level at US56.25c after the Reserve Bank of Australia on Monday predicted that the drought-hit economy would slow next year. At one stage, it touched US55.80c, but bounced up to US56.03c (compared with US56.45c on Monday).
The outlook for the kiwi was still bullish, if muted, in the short-term, BNZ currency strategist Stu Ritson said.
"The inability for the NZD to gain traction despite the softer greenback suggests a clearing of stale long positions," he said.
Market sentiment had not been assisted by the weak read on global growth, including the OECD leading indicators released over the weekend.
During the day the greenback recovered from three-month lows against the euro on worries about the US economy and prospects for a US war with Iraq.
But traders said the dollar's rebound was due partly to wariness about Japanese intervention, and to profit-taking because it had been oversold.
By 5pm, the US dollar steadied in Wellington to 119.78 yen (119.58 yen), and the euro was at US$1.0085 (US$1.0130).
On the crosses at 5pm, the kiwi was buying A87.87c (A87.63c), 0.4880 euro (0.4882), 58.97 yen (59.17), 0.3107 pence (0.3110), and 0.7140 Swiss francs (0.7141).
The Australian dollar was buying $1.1383 ($1.1405).
The 90-day bank bill yield was at 5.89 per cent (5.90), the New Zealand dollar trade-weighted index was at 55.70 (55.82), and the monetary conditions index was at minus 236 (minus 224).
The April 2004 bonds fell to 5.56 per cent (5.61), the November 2006s were at 5.82 per cent (5.87), and the November 2011s were at 6.05 per cent (6.14).
- NZPA
<i>Currency:</i> Kiwi rebounds, but clipped by aussie
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