The New Zealand dollar barely registered a pulse when Prime Minister Helen Clark announced at midday yesterday that the general election would be held on July 27.
However, the kiwi closed on its highs at US48.92c, up from last night's close of US48.70c, while the aussie was almost unchanged at US56.99c (US56.96c yesterday).
One local dealer said the kiwi traded in a US48.66/93c range during the day.
"The kiwi hasn't traded at all on the back of the election, it's been very well muted and I don't think there were too many surprises.
"Kiwi's still looking pretty well bid. Aussie's still dictating direction, but I think at this stage we'll probably look at it to base around US48.80c (overnight) and maybe have a go at the US49.10c level," the dealer said.
The New Zealand dollar, one of the strongest currencies in the world this year, was unchanged about US48.70c after the noon announcement.
Bank of New Zealand chief dealer Mike Symonds said there were few worries in the forex market.
"On the evidence of the polls to date, markets in general expect the status quo and therefore stability. Unless there was a marked change in opinion polls and they told us there was going to be a closer race, at this point it is not going to impact at all on currency markets," Mr Symonds said.
"Markets like certainty, and they are keen to get the election out of the way and move on and now having a date confirmed, especially one so close, if anything, could be seen in a slightly positive light."
The dealer said the kiwi and aussie had been through a period of consolidation recently.
"The market's not run out of steam but it's slowed down a little bit. There's a bit of uncertainty popping into a few of the established long positions, there's been a few profit-takers on that front over the last couple of days.
"But kiwi on its own is probably outperforming the aussie at the moment. I think the consolidation's very positive for the kiwi medium-term."
Overseas, the greenback initially weakened when news broke that a Al Queda operative planned to plant a radioactive bomb had been arrested in the United States, prompting investors to initially leap in and increase their exposure to the aussie, kiwi and euro. However, the US dollar steadied during the Tokyo session.
On the crosses at 5pm, the kiwi was buying A85.84c (A85.51c), 60.93 yen (60.80), 33.44 pence (33.44), 0.7612 Swiss francs (0.7612) and 0.5173 euros (0.5178).
Against the kiwi the aussie was buying $NZ1.1649 ($NZ1.1693).
On the money market 90-day bills were at 5.93 per cent (5.95), the trade-weighted index was at 56.65 (56.54) and the monetary conditions index was at minus 145 (minus 155).
The April 2004 bonds were at 6.09 per cent (6.14), the November 2006 bonds were at 6.51 per cent (6.61), and the November 2011 bonds were at 6.73 per cent (6.78).
- NZPA
<i>Currency:</i> Little reaction from kiwi to early election
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