The New Zealand dollar traded quietly yesterday as nervous investors shied away from markets worldwide, waiting to see what impact the United States strikes against Afghanistan would have on currency markets.
"It's relatively subdued, the kiwi dollar's traded in a reasonably narrow range, but if you look at it in the context of the aussie dollar and the euro especially, the market's generally a bit quiet," BNZ chief currency dealer Mike Symonds said.
"I guess it reflects the current uncertainty about the immediate direction for the major currencies."
At 5pm the kiwi was trading at US41.57c, having traded between US41.54c and US41.75c during the day. It was little improvement on yesterday's close of US41.55c but from a technical point of view, Mr Symonds said, the kiwi was holding up quite well.
With little in the way of company news expected this week, New Zealand dealers would be watching the fortunes of the greenback, which has been easing against the euro.
"The euro is holding up quite well at the moment and the way the US dollar has been trading would suggest that there would be further gains in the euro, and that's likely to lend a little bit of support for the kiwi in the very short-term," Mr Symonds said.
But the kiwi would only benefit if it broke the US41.80-42c barrier over the next couple of day, otherwise it would drift back down towards the lower end of its range, he said.
Overnight, dealers predicted the kiwi would trade between US41.45-85c.
The New Zealand dollar was also just "marking time" on the aussie-kiwi cross. The Australian dollar strengthened from $NZ1.2202 compared with $NZ1.2193 at yesterday's close, while the kiwi was buying A81.96c (A82c).
On other cross, the kiwi was trading at 49.87 yen (49.82), 28.23 pence (28.05), 0.8832 marks (0.8843), 0.6679 Swiss francs (0.6698) and 0.4516 euros (0.4521).
The trade-weighted index was at 49.05 (49.03), while the 90-day bill yields were at 5.26 per cent (5.26). The monetary conditions index was at minus 932 (minus 935).
Among the bonds, the March 2002s were at 5.08 per cent (5.08), the April 2004s were at 5.32 per cent (5.33), the November 2006s were at 5.92 per cent (5.91), and the November 2011s were at 6.38 per cent (6.36).
- NZPA
<i>Currency:</i> Kiwi trades quietly
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