KEY POINTS:
The New Zealand dollar fell sharply in early afternoon trade today then recovered in the next few hours to regain much of its lost ground.
It then fell away again in the late afternoon, but less dramatically than in the first dive.
At the deepest point of the trough the kiwi got below US77.80c against the greenback for the first time in about a week.
"It's been an interesting day," Bank of New Zealand currency strategist Danica Hampton said.
"I think it was really just market positioning that sent it down," she said.
"To begin with it looked really like it was just heavy selling out of Asia."
The kiwi was rumoured to have initially been sent lower by model-related trades, in particularly people selling kiwi and buying the Australian dollar, Ms Hampton said.
As it moved lowered it triggered a large amount of stop-loss selling -- being sold once it hit a certain level.
Then around 77.80c renewed demand had kicked back in.
Against the US dollar, the kiwi hit a low of US77.79c, having been as high as US78.29c earlier in the day, according to Reuters data.
The pattern was similar against other currencies, with the NZ dollar bottoming against the aussie at A90.75c from a peak for the day of A91.24c.
Against the euro it went from a high of 0.5744 to a low of 0.5712, and against the yen from 96.64 to 96.10.
By 4.30pm the kiwi was buying US78.04c from US78.17c at 8am today, A90.91c from A91.10c, 0.5729 euro from 0.5734 and 96.51 yen from 96.46. The trade weighted index was at 75.44, compared to 75.53 at 8am.
Investors are now looking to tomorrow's second-quarter New Zealand Institute of Economic Research business confidence data and Friday's May month retail sales for further information about the domestic economy.
Reuters currency rates:
4.30pm today 5pm Friday
NZ dlr/US dlr US78.04c US78.21c
NZ dlr/Aust dlr A90.91c A91.29c
NZ dlr/euro 0.5729 0.5754
NZ dlr/yen 96.51 96.33
NZ dlr/stg 38.81p 38.91p
NZ TWI 75.44 75.63
Australian dollar US85.83c US85.67c
Euro/US dollar 1.3620 1.3594
US dollar/yen 123.65 123.16
- NZPA