The high-yielding New Zealand dollar retreated to a week low and is ripe for a pull-back after a fairly strong performance across the board recently, analysts say.
About 5.40pm, the NZ dollar was buying US65.50c from US66.17c on Friday, as the US dollar strengthened in the wake of stronger than expected employment data on Friday.
The kiwi was also buying A88.23c from A88.71c, 0.5195 euro from 0.5216, and 78.05 yen from 78.14. The trade weighted index was at 66.32 from 66.72.
"The NZD slid slightly against the US dollar last week, but put in a relatively strong performance against its other trading partners and climbed about 1.5 per cent on a trade weighted basis," Bank of NZ currency strategist Danica Hampton said.
"The NZ dollar has been buoyed by the combination of its status as a relatively high yielding currency, and by heavy demand for NZD/AUD."
Given its strength against the US dollar on the back of interest rates and commodity prices, profit-takers are expected to move in over the coming fortnight, capping the kiwi around US66.60c, she said.
ANZ said the kiwi appeared to have reached its limit for the current cycle, although it was still in some demand due to its high yield, and would thus remain trapped in a range.
Strong retail sales data on Friday could boost the kiwi, although the NZ Institute of Economic Research's quarterly business survey tomorrow is likely to add to the picture of a slowing economy and cap any upside, ANZ analysts said.
The US dollar rose to a seven-month high against the Japanese yen after reports that North Korea had conducted a nuclear test. The greenback was also supported by expectations that US interest rates will remain at current levels for the meantime given signs of strength in the jobs market.
Reuters currency rates:
5.40pm today 5pm Friday
NZ dlr/US dlr US65.50c US66.17c
NZ dlr/Aust dlr A88.23c A88.71c
NZ dlr/euro 0.5195 0.5216
NZ dlr/yen 78.05 78.14
NZ dlr/stg 35.00p 35.26p
NZ TWI 66.32 66.72
Australian dollar US74.23c US74.60c
Euro/US dollar 1.2605 1.2685
US dollar/yen 119.17 118.06
- NZPA
<i>Currency:</i> NZD lower against USD following US jobs data
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