KEY POINTS:
The New Zealand dollar recovered from an early fall, riding the coat tails of a stronger Australian dollar which hit a 10-year high today.
By 5pm, the kiwi was at US71.69c from US71.38c late on Friday afternoon. The currency spiked above US71.80c briefly early on Saturday morning.
Against the Aussie, the kiwi softened to A88.21c from Friday's A88.35c level.
A dealer said the kiwi traded between US71.33c and US71.76c, drifting off initially on stop-loss selling before buyers stepped in.
The Aussie hit a 10-year high of US81.30c today after a 0.9 per cent surge in Australian retail sales ratcheted up speculation of an interest rate hike across the Tasman as early as this week.
"The kiwi's got a lot of support on the back of the Aussie. Probably if we go into London above US71.60c tonight it'll remain reasonably well-bid," the dealer said.
The NZ dollar was likely to hold its ground for the moment, despite an increasingly unfriendly global environment with escalating Middle East tensions, higher oil prices, and softer US growth and high inflation among concerns, Westpac Bank said.
"The current environment favours further US dollar weakness, and there is little in the way of upcoming events that could undermine expectations of another RBNZ rate rise," Westpac said.
There is little data due in a holiday-shortened week, with the highlight ANZ's commodity price index on Wednesday.
The US dollar held steady against the yen today, as a slight dip in Japan's tankan survey of business confidence did little to alter market expectations the Bank of Japan would wait until the July-September quarter to raise interest rates.
The yen's reaction was subdued, however, as the tankan did not deviate too much from market expectations, traders said.
Reuters currency rates:
5pm today 5pm Friday
NZ dlr/US dlr US71.69c US71.38c
NZ dlr/Aust dlr A88.21c A88.35c
NZ dlr/euro 0.5366 0.5342
NZ dlr/yen 84.40 83.92
NZ dlr/stg 36.41p 36.32p
NZ TWI 69.91 69.66
Australian dollar US81.30c US80.73c
Euro/US dollar 1.3361 1.3335
US dollar/yen 117.72 117.64
- NZPA