KEY POINTS:
The New Zealand dollar rose against the US dollar and some other major currencies today despite doubts the Reserve Bank will hike interest rates next week.
The doubts were prompted by yesterday's 0.2 per cent fall in the Consumer Price Index, the first negative CPI result in nearly six years.
Against the US dollar, the kiwi closed on US69.42c from US69.17c at 5pm yesterday. However, against the Australian dollar it fell to A88.01c from A88.34c yesterday and A88.80c before the morning CPI announcement.
The Australian dollar strengthened nearly half a cent against the US dollar -- to US78.87c from US78.28c yesterday.
The NZ dollar trade weighted index rose to 68.87 from 68.84.
ANZ bank today said market expectations that the Reserve Bank would raise the Official Cash Rate next week had fallen substantially.
There was "very heavy" selling on the cross against the aussie overnight. Further falls on the cross were likely, as a result of "misplaced expectations", as participants in the market looked to the Reserve Bank of Australia's next interest rate decision on February 7.
Dampened expectations of a rate rise in Japan reignited yield-related buying.
The yen was near a 13-month low against the US dollar as last-minute speculation that the Bank of Japan could keep interest rates steady weighed on the low-yielding currency.
Sources, not at the central bank but familiar with the BOJ's thinking, told Reuters that it was likely to forgo a rate hike, wanting more time to assess the strength of consumption and a possible pick-up in weak consumer prices.
The reports have surprised investors who had thought a rate rise to a decade-high 0.5 per cent from the current 0.25 per cent was a done deal, despite signs of political pressure.
No rate rise would put the yen under more selling pressure, said Masafumi Yamamoto, a currency strategist for Nikko Citigroup in Tokyo.
Meanwhile, the euro edged higher to US$1.2955 from around $1.2940 in late New York trading.
Reuters currency rates:
5pm today 5pm yesterday
NZ dlr/US dlr US69.42c US69.17c
NZ dlr/Aust dlr A88.01c A88.34c
NZ dlr/euro 0.5354 0.5352
NZ dlr/yen 83.70 83.62
NZ dlr/stg 35.18p 35.28p
NZ TWI 68.87 68.84
Australian dollar US78.87c US78.28c
Euro/US dollar 1.2963 1.2923
US dollar/yen 120.57 120.83
- NZPA