The New Zealand dollar continued to tread water today, but found some support from ongoing yield-related demand.
By 5.30pm, the kiwi was at US65.80c from US64.97c at yesterday's close. Against the Australian dollar, it was trading at A87.95c from A87.22c.
"It's had a squeeze just above US66c, and it's back off it a little bit, but it still seems to be attracting some uridashi interest overnight," said ANZ Investment Bank chief foreign exchange dealer, Murray Hindley.
Two small uridashi bond issues (bonds issued in Japan but denominated in NZ dollars) overnight totalled NZ$162 million.
"Aussie retail sales were slightly stronger than market expectations, but their building approvals were down, which pulled us back a little bit, but there still seems to be some demand for the kiwi on the back of yield," Mr Hindley said.
The kiwi traded between US65.61c and US66.07, with little data of note due until next week's NZ Institute of Economic Research quarterly business opinion survey on Tuesday.
"We're going to be pushed around by external factors," Mr Hindley said. "There seems to be some support for it at US65.60, and resistance just above US66c overnight should cap it."
The US dollar stayed under pressure after data showed US manufacturing growth slowed to its weakest in 16 months, bolstering expectations that a slowing economy could prompt the Federal Reserve to cut interest rates.
Lower US interest rates would remove a pillar of support for the dollar, which benefitted as the Federal Reserve steadily raised interest rates over two years to a peak of 5.25 per cent until June, luring foreign investors to US assets.
Dealers said the market was looking to the week's main event, US non-farm payrolls data for September due on Friday, to get a better idea of whether the Fed will cut rates in the near- to mid-term.
The yen ticked up to the day's high against the dollar and the euro after Japan's new Finance Minister Koji Omi said that economic conditions had made it safe for the government to declare an end to deflation.
Rates:
5.30pm today 5pm Monday
NZ dlr/US dlr US65.80c US64.97c
NZ dlr/Aust dlr A87.95c A87.22c
NZ dlr/euro 0.5160 0.5130
NZ dlr/yen 77.40 76.85
NZ dlr/stg 34.88p 34.74p
NZ TWI 66.17 65.59
Australian dollar US74.75c US74.48c
Euro/US dollar 1.2751 1.2665
US dollar/yen 117.67 118.26
- NZPA
<i>Currency:</i> Kiwi treads water
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