The New Zealand dollar closed weaker today after thin trading in a market affected by holiday's in Auckland and Australia.
The kiwi opened half a cent lower than Friday's US67.70c close, and after trading between US67.05c and US67.27 finished at US67.22c.
"It's been very, very quiet in the kiwi," Westpac chief dealer in New Zealand Basil Payn said.
The local market was likely to trade sideways until the Reserve Bank marks its decision on the cash rate on Thursday.
Mr Payn said there was still a propensity to buy dips mainly because of US dollar weakness and negative US sentiment.
"You still have to lean towards the prospect of higher levels later in the week."
He said the forex market was adamant the Reserve Bank would sit on its hands on Thursday.
"You'd expect quite a significant rally in the kiwi if they were to put rates up," Mr Payn said. Conversely, a reduction in the cash rate would see the kiwi slide rapidly.
The Australian dollar also tiptoed lower today, ending at US77.33c compared with its US77.71c close on Friday.
BNZ currency strategist Sue Trinh said foreign exchange markets had been dominated by "pre-G7 speak" ahead of the Group of Seven meeting in Florida on February 6.
She said the US dollar could strengthen as central bank officials attempt to talk the dollar up and stem the euro's climb.
European Central Bank president Jean-Claude boss Trichet stressed the need stability in currency markets ahead of the G7 meeting, adding that he would be concerned by excessive exchange rate moves.
Other officials said weakness in the US dollar was a problem.
"There was a lot of people cutting back on their short US dollar positions and buying the US dollar back," Ms Trinh said.
"That had its most pronounced affect against the European currencies, the euro and the stirling especially.
"It was just a matter before the kiwi bore the brunt of that and was dragged down lower," she said.
The euro closed here sharply lower at US$1.2575 from its US$1.2716 local close on Friday while greenback was buying 106.23 yen (106.18).
Meanwhile, on the crosses, the New Zealand dollar was buying A86.92c (A87.10c), 0.5345 euro (0.5322), 71.42 yen (71.86), 36.82 British pence (36.71), and 0.8355 Swiss francs (0.8339).
On a trade weighted basis, the New Zealand dollar was at 66.36 (66.50).
The monetary conditions index was at plus 585 (594), and 90-day bank bills were at 5.34 per cent (5.33).
On the debt market, February 2006 bond yields were at 5.45 per cent (5.44), July 2009 bonds were at 5.71 per cent (5.71), and April 2013 bonds were at 5.86 per cent (5.87).
- NZPA
<I>Currency:</I> NZ dollar eases in holiday-affected market
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