KEY POINTS:
The New Zealand dollar held generally steady against most currencies today but pulled back against a strengthening Australian dollar following strong economic data there.
Against the greenback, the kiwi traded a narrow range amid subdued trading due to a Labour Day public holiday in the United States.
It closed the session on US70.27c, little different from its US70.34c close at 5pm yesterday.
But against the Australian dollar, the kiwi fell to A85.20c from A85.60c at 5pm yesterday.
News of faster-than-expected Australian economic growth in the June quarter put investors on watch for another rate rise soon.
GDP grew by 0.9 per cent in real, seasonally adjusted terms in the June quarter and by 4.3 per cent from a year earlier.
Both the quarterly and annual increases were faster than can be sustained over the long term. If anything, the bottom line GDP figure understated momentum in the economy, because domestic final demand rose by 1.8 per cent in the quarter and by 5.6 per cent over the year - very strong rises in both cases.
Against the greenback, the Australian dollar rose to US82.43c from US82.18c yesterday.
ANZ Bank said US data due later in the week should give the first real insights into whether recent tightening in credit conditions was hurting economic growth.
Central bank interest rate decisions out of Australia, Britain and Europe could also provide an update of how policymakers saw the credit tightening scenario panning out, ANZ said.
Dealers said rises in high-yielding currencies such as the kiwi will still be limited due to lingering investor wariness over risk even after the Federal Reserve and US government gave assurances they would shelter the economy from the subprime mortgage crisis.
While the US dollar remained pressured due to expectations the Fed will cut interest rates later this month, the euro was also top-heavy as investors see fading chances for the European Central Bank to boost rates on Thursday, traders said.
The New Zealand dollar trade-weighted index closed on 67.69 against 67.80 at the same time yesterday.
Reuters currency rates:
5pm today 5pm yesterday
NZ dlr/US dlr US70.27c US70.34c
NZ dlr/Aust dlr A85.20c A85.60c
NZ dlr/euro 0.5161 0.5158
NZ dlr/yen 81.42 81.59
NZ dlr/stg 34.80p 34.88p
NZ TWI 67.69 67.80
Australian dollar US82.43c US82.18c
Euro/US dollar 1.3612 1.3637
US dollar/yen 115.88 116.00
- NZPA