KEY POINTS:
The New Zealand dollar today got a fresh lift from third quarter retail sales data and confirmation of the country's sovereign credit rating by Standard & Poor's.
It rose to end the local session on US66.15c, having opened on US66.00c. It had eased from US66.20c yesterday at 5pm to a US65.80c low overnight.
The resilience of New Zealanders' spending habits surprised economists, with retail sales volumes up a seasonally adjusted 1 per cent for the September quarter.
High spending in the month of September was the most surprising factor, up 1.2 per cent against forecasts of no rise at all.
Statistics New Zealand said sales volumes reflected upbeat consumer spending and supported views the central bank will kept interest rates on hold next month.
Strong retail sales underpin inflationary pressures and put the prospect of interest rate cuts further into the distance.
Also supporting the kiwi, S&P affirmed the country's AA-plus sovereign credit rating and said the outlook was stable.
There had been some concern the rating could be under threat due to New Zealand's current account deficit, running at 9.7 per cent of GDP in the June year.
"The sovereign ratings on New Zealand are underpinned by the country's favourable fiscal and monetary performance, economic resilience, and conservative macro-economic management," said S&P credit analyst Kyran Curry following the agency's regular review.
"The strength of the Government's fiscal position significantly mitigates the risk of New Zealand's high external debt, although it does not eradicate this risk entirely," he said.
Against the Australian dollar, the kiwi was steady, buying A86.41c from A86.46c at yesterday's close. The trade weighted index rose to 66.14 from 66.04.
ANZ bank today said the NZ dollar was trapped in a narrow range as markets digested a raft of global economic data.
The euro pared Tuesday's gains after French Prime Minister Dominique de Villepin called for more collaboration among euro zone monetary authorities on managing the exchange rate.
His comments were initially taken as a call for a weaker euro, as some euro zone officials are concerned that the currency's strength will hamper European exports and economic growth.
The US dollar steadied against the yen after sliding on soft producer prices and retail sales figures that suggested a slowing US economy.
The market stayed focused on data ahead of a bevy of US reports that should further help shape interest rate expectations, including minutes from the Federal Reserve's last policy meeting, and consumer prices data.
"While many players want to sell the dollar now, a higher-than-expected CPI could boost expectations for a rate hike and push up the dollar to 119 yen," said a trader at a Japanese bank.
Rates:
5pm today 5pm Tuesday
NZ dlr/US dlr US66.15c US66.10c
NZ dlr/Aust dlr A86.41c A86.46c
NZ dlr/euro 0.5163 0.5154
NZ dlr/yen 77.91 77.78
NZ dlr/stg 34.90 34.71p
NZ TWI 66.14 66.04
Australian dollar US76.55c US76.46c
Euro/US dollar 1.2811 1.2828
US dollar/yen 117.74 117.64
- NZPA