The New Zealand dollar recovered from yesterday's battering after New Zealand's predicted September trade deficit turned out not as bad as feared.
The kiwi, which plunged half a cent against both the Australian and American dollars yesterday after the Reserve Bank surprised markets by leaving the Official Cash Rate unchanged, closed at US65.92c today from US65.70c yesterday. Against the aussie, it ended on A86.25c from A86.14c,
Statistics New Zealand said the deficit for September was $587 million against the consensus of economists' forecasts at $877m.
ANZ bank said the data suggested the current account deficit had peaked and would remain around 9.7 per cent of GDP in the September quarter.
"It is heartening to see that the trade balance has been improving for three consecutive quarters on a trend basis," ANZ said.
The US dollar weakened overnight for the second session in a row after the Federal Reserve's steady economic outlook forced investors to reassess the likely path of US monetary policy and sell the US currency.
It breached a key technical level versus the euro, unleashing a raft of US dollar selling.
ANZ Bank said today said that while the New Zealand dollar may look punch drunk after taking a couple of king hits from economic data and the Reserve Bank's decision, it had an uncanny way of avoiding the knock-out blow.
This time, the encouraging trade data and weakness of the US dollar had given it enough relief to get it off the canvas, ANZ said.
But the kiwi had broken its up-trend against most major crosses and the trade-weighted index fell to 66.15 from 66.12 yesterday.
The lead-up to the Reserve Bank of Australia's cash rate decision on November 8 would provide better levels for local exporters and offshore position holders against the aussie, ANZ said.
The yen struck a record low versus the euro and fell against the US dollar after a slowdown in the growth of Japanese consumer prices suggested that the Bank of Japan could wait until 2007 to raise interest rates.
The euro was well supported, thanks in part to a warning from European Central Bank President Jean-Claude Trichet that the central bank should remain vigilant for inflation risks, which he said could continue into 2007.
Rates:
5pm today 5pm yesterday
NZ dlr/US dlr US65.92c US65.70c
NZ dlr/Aust dlr A86.25c A86.14c
NZ dlr/euro 0.5190 0.5200
NZ dlr/yen 78.12 78.06
NZ dlr/stg 34.87p 34.93p
NZ TWI 66.15 66.12
Australian dollar US76.45c US76.24c
Euro/US dollar 1.2703 1.2637
US dollar/yen 118.48 118.79
- NZPA
<i>Currency:</i> Kiwi recovers after trade deficit better than forecast
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