The New Zealand dollar eased a little today after news of a possible concession from Iraq caused the US dollar to rally.
By 5pm the kiwi was at US54.77c - just over 20 points below yesterday's US54.99c close. Its Australian trading mate eased to 58.89c (US59.08c).
Iraq agreed overnight to allow unconditional reconnaissance flights over its territory to seek out banned weapons.
That pushed the US unit to a two-month high against the yen and its strongest point against the euro in a week. Here it closed at 121.27 yen compared with 120.43 yen at yesterday's local close, while the euro dipped to $US1.0735 ($US1.0805).
The greenback remained firm even after the White House dismissed the offer, saying "the bottom line" was for Baghdad to disarm.
Westpac currency strategist Johnathan Bayley said it was difficult to work out whether the war risk was increasing or fading.
On the one hand the US continued to talk tough, while on the other Iraq appeared to be becoming more co-operative and Germany and France were putting together a plan to avert war.
Until that became clear, the New Zealand dollar would likely remain frozen in the headlights of impending war this week, occupying a similar range to that seen last week.
"The threat of war and the variables around it continue to dominate the market's attention, depriving positioning risk, technical developments, and monetary policy perceptions of their usual influence," Mr Bayley said.
Data out today showing New Zealand's unemployment rate slipped to its lowest level in 15 years in the December quarter, at 4.9 per cent, failed to move the kiwi.
Statistics New Zealand's Household Labour Force Survey, the country's official employment measure, showed unemployment fell from 5.4 per cent in the September quarter.
On the crosses at 5pm the kiwi was buying A93.02c (A93.09c at yesterday's close), 0.5103 euro (0.5090), 66.42 yen (66.22), 33.68 pence (33.76) and 0.7484 Swiss francs (0.7464).
The Australian dollar was buying $NZ1.0763 ($NZ1.0742).
New Zealand's trade-weighted index was at 60.64 (60.68), 90-day bank bills were at 5.85 per cent (5.84) and the monetary conditions index was at plus 185 (plus 187).
The April 2004 government bonds were at 5.50 per cent (5.47), the November 2006s were at 5.53 per cent (5.55), the November 2011s were at 5.92 per cent (5.89), and the April 2013s were at 5.94 per cent (5.91).
- NZPA
<i>Currency:</i> Kiwi softens as US dollar rallies on Iraqi concession
AdvertisementAdvertise with NZME.