The New Zealand dollar remained near three year highs yesterday as many players in the market were distracted by sailing and parties.
By 5pm, the kiwi had risen to US51.55c from US51.36c at Monday's close, levels last seen in January 2000, while its Australian counterpart was at US56.65c (US56.58c).
One Citibank dealer said the telling time for the kiwi would be Friday's close.
"If you look back six or seven years, the retracement from US71.70c the high to US38.95c, this is the 38 per cent retracement level so it is being watched quite closely.
"If we can get a weekly close above US51.50c, then our target's US55.30c, (but) I don't think we're going to get that weekly close."
The kiwi bobbed higher yesterday, trading between US51.32/60c, and the dealer expected it to get as high as US51.70c overnight.
"But (US51.50c) is such a long-term level itself, it doesn't matter if the kiwi trades through it, it's a matter of whether it closes the week there," he said.
"If it does break through that US51.50c and we get a weekly close above there, you'll get some interest out of the exporters. Importers have been doing their buying on the way up, they did a lot at US50c or just above, and they've already done a lot in the kiwi-aussie."
Volumes had dried up as the America's Cup and the lead-in to Christmas distracted market players.
"Everyone's out on the water, or out at Christmas dos. Everyone's done what they need to do so we're only seeing tidying up business. Volumes are very light and that's half the reason we're up here," he said.
On the trans-Tasman cross the kiwi closed at A91.00c, near Monday night's offshore levels which were last seen in December 1997, and above Monday's close of A90.79c.
While the long-term projection, over the next three to four years, was A96.50c, the kiwi was unlikely to sustain current levels against the aussie at present.
In offshore trade, the US dollar held most of its overnight gains against the yen, after rising on a warning by Japan that it would act against "rapid movements" in exchange rates.
The greenback was buying 120.79c at 5pm in Wellington, up slightly from Monday night's close of 120.64, while the euro eased to $US1.0281 ($US1.0209).
On the other key crosses at 5pm, the kiwi was buying 0.5014 euro (0.5031), 62.27 yen (61.96), 32.31 pence (32.33), and 0.7391 Swiss francs (0.7429).
The Australian dollar was at $NZ1.0987 ($NZ1.1016).
The trade weighted index was at 58.04 (57.92), the monetary conditions index was at minus 25 (minus 35), and the 90-day bank bill yield was steady at 5.92 per cent.
On the bond market, the April 2004s were unchanged at 5.75 per cent, the November 2006s were at 6.00 per cent (5.98), the November 2011s were at 6.33 per cent (6.31), and the April 2013s were at 6.37 per cent (6.35).
- NZPA
<i>Currency:</i> Kiwi rides updraught as market players drift off
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