KEY POINTS:
The New Zealand dollar recovered today, after it was sold off in the wake of a surprising fall in the Producer Price Index.
By 5pm, the kiwi was at US68.35c from US68.47c late on Monday, while against the Australian dollar it was at A88.50c from A88.43c.
New Zealand producer prices fell for the first time in three years, with input prices down 0.3 per cent and output prices down 0.5 per cent.
Economists polled by Reuters had expected falls of 0.1 per cent and 0.2 per cent respectively, but did not believe the data was enough to deter the Reserve Bank of NZ from raising interest rates.
The input price index measures the cost of goods and services at the farm and factory gate.
"We probably don't feel it will go above US68.60c at the moment, it's a pretty quiet day," one dealer said, noting the kiwi had traded a range of US68.18c to US68.62c during the session.
"If anything the New Zealand dollar ... has been reasonably strong, not reflecting the strength we had overnight in the US dollar," he said.
The main piece of data this week is quarterly retail sales figures, while Finance Minister Michael Cullen appears at the Finance and Expenditure Committee tomorrow.
The US dollar rose against the euro and neared a four-year peak against the yen after G7 officials wrapped up a weekend meeting without sounding a formal alarm about the Japanese currency's persistent weakness.
The G7 statement did not specifically address the yen's role as a funding currency in carry trades, in which the Japanese currency has been dumped in favour of higher-yielding units like the New Zealand and Australian dollars.
Reuters currency rates:
5pm today 5pm yesterday
NZ dlr/US dlr US68.35c US68.47c
NZ dlr/Aust dlr A88.50c A88.43
NZ dlr/euro 0.5275 0.5260
NZ dlr/yen 82.99 83.52
NZ dlr/stg 35.08p 35.05p
NZ TWI 68.23 68.28
Australian dollar US77.25c US77.41c
Euro/US dollar 1.2958 1.3018
US dollar/yen 121.44 121.97
- NZPA