6.40pm
Profit-takers swooped on the burgeoning New Zealand dollar today, pulling it back from a fresh multi-year high.
After hitting a six year high of US64.68c overnight, the kiwi slid to US64.04c at 5pm, compared with US63.76c at yesterday's close.
The Australian dollar, which also posted a new high at US72.67c, retraced nearly all its gains to close here at US72.18c (US72.19c).
Dealers said the significant pullback on the kiwi was due to selling by leverage accounts.
But given the kiwi dollar's "awesome week" -- a swift rise from US62.50c -- a little "corrective consolidation" was not surprising, BNZ currency strategist Sue Trinh said.
While the prospect of an interest rate rise next month had been a driving factor, the "defining theme" had been US weakness, she said.
"We've seen the likes of the euro rally to multi-year highs and basically US dollar weakness across the board, and that has been the single most influential driver of the kiwi's rise."
However, interest rates had been a key to the kiwi-aussie cross, reflecting an expectation that the Reserve Bank of Australia would raise its rates. Currently both New Zealand and Australia have an offical cash rate of 5 per cent, but the stronger kiwi dollar is raising expectations that our central bank will hold off.
"It's been continuous all week -- there's been huge demand on the kiwi against the aussie," Sue Trinh said.
On the world scene, bombings in Turkey further weakened the greenback, sending the euro to a fresh multi-year high of 1.1980 overnight. In New Zealand the euro closed at 1.1894 (1.1905).
The greenback was buying 109.17 yen (108.92 last night).
"Investors regard the US dollar as synonymous with geopolitical risk and terrorism," Michael Jansen, a market strategist at National Australia Bank in Sydney.
Dealers are picking the kiwi to trade more sedately tonight between US63.80c/64.50c but the BNZ's next technical barrier for the kiwi is US66.10c.
On other crosses the kiwi improved to A88.77c (A88.32c), 69.95 yen (69.44), 37.66 pence (37.57), 0.5387 euro (0.5357), and 0.8334 Swiss francs (0.8322).
The Australian dollar was buying $1.1265 ($1.1323).
The trade weighted index was at 65.45 (65.10), while the monetary conditions index was at plus 522 (499), and 90-day bank bills were at 5.40 per cent (5.44).
On the debt market, April 2004 bonds were at 5.27 per cent (5.29), February 2006s were at 5.73 per cent (5.77), and November 2011s were 6.14 per cent (6.16).
- NZPA
<i>Currency:</i> Kiwi takes a breather after stellar run
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