KEY POINTS:
The New Zealand dollar rebounded strongly today from its plunge yesterday and the focus is now turning to retail sales data due tomorrow.
By 5pm today the NZ dollar was buying US69.95c, up from a low yesterday around US68.25c, hit as Japanese investors offloaded the currency.
In its overnight rebound it got up to near US70.60c. It then slipped through US70c today, weighed down in part by a weaker Australian dollar on the back of comments from the Reserve Bank of Australia that it would not wait for inflation to fall before lowering interest rates.
Against the yen, the NZ dollar eased to 76.60 from the 77.14 at 8am but it was above a two-year low of 73.78 reached on Wednesday.
The June month and quarter retail sales data will help investors assess the next likely move in interest rates especially as the currency's recent fall may make the central bank more cautious about further cuts.
Bank of New Zealand currency strategist Danica Hampton said the NZ dollar was pressured yesterday by heavy selling from a variety of Asian accounts.
Those flows appeared to be a mix of position squaring from speculative retail accounts and real money selling as longer term investors bailed out of NZ dollar denominated assets, she said.
But technical indicators suggested the NZ dollar was "oversold" against the US currency, and there was concern the sharp slide in the trade weighted index may mean the Reserve Bank was more measured about cutting interest rates, Ms Hampton said.
In that environment market participants were quick to take profits on short NZ dollar positions.
The kiwi also continued its climb back against the Australian dollar, getting to around A80.40c at 5pm, up from A79.62c at yesterday's local close.
The trade weighted index rose to 64.97 from 63.82.
- NZPA