KEY POINTS:
The New Zealand dollar eased a little today after quarterly GDP data came in weaker than expected.
The economy expanded by 0.8 per cent, just down from economists' forecasts of 0.9 per cent and the Reserve Bank's prediction of 1.0 per cent.
The kiwi ended on US71.38c, having traded between US71.15c and US71.58c. The market initially tried to sell the kiwi after the GDP data but it quickly bounced back.
Although there was suggestion the weaker than expected GDP may give Reserve Bank Governor Alan Bollard an excuse not to hike interest rates again, dealers said that was not the market's focus.
A Wellington trader said the market was still factoring in a 50 per cent chance of a rate rise.
He said what was driving the market was whether people were prepared to take on risk or not -- and the kiwi was gaining support on that basis.
Traders who had gone short in the kiwi had failed to make money and the short traders were losing confidence, he said.
"The market is coming to the conclusion that, while the kiwi won't fly, it won't go down the tubes either," he said.
The National Bank's monthly business confidence survey showed a net 13 per cent expect business conditions to deteriorate over the coming year, reversing the recent trend.
Forex dealers said the survey did not alter the picture much.
They said the return of the market's risk appetite was partly fuelled by statements from United States Federal Reserve chairman Ben Bernanke giving a more balanced view of the US economy.
Dr Bernanke acknowledged risks from the weak housing market, but also stressed lingering inflationary pressures, which the markets interpreted to mean the Fed was not ready to reduce US interest rates yet.
Investors were also more confident that tensions between Iran and the US would not escalate into a full-blown confrontation.
The kiwi closed steady with yesterday's close against the Australian dollar on A88.35c while the trade weighted index ended the week on 69.66 from 69.57.
Reuters currency rates:
5pm today 5pm yesterday
NZ dlr/US dlr US71.38c US71.25c
NZ dlr/Aust dlr A88.35c A88.35c
NZ dlr/euro 0.5342 0.5347
NZ dlr/yen 83.92 83.50
NZ dlr/stg 36.32p 36.25p
NZ TWI 69.66 69.57
Australian dollar US80.73c US80.68c
Euro/US dollar 1.3335 1.3326
US dollar/yen 117.64 117.16
- NZPA