The New Zealand dollar continued its slide today in tandem with the Australian dollar, as a brightening picture for key offshore economies helped support the US dollar.
By 5pm the kiwi was buying US58.07c compared with its US58.95c close, while the aussie also fell, to US65.23c from US66.16c yesterday.
One dealer said the kiwi traded between a low today of US57.50c and US58.90c, and it was likely to be capped by US58.60c overnight, with support at US57.60c.
However, he said it was difficult to pick key levels at present with any confidence.
It had been a "pretty volatile day".
Some analysts believe the recent sell-off in the New Zealand, Australian and Canadian dollars is a reversal from yield-seeking positions to equities on the hope of turnaround in the Japanese and US economies.
However, Westpac currency strategist Johnathan Bayley said dollar bloc's tumble against the greenback was probably a consequence of "stretched valuations" on non-US dollar crosses.
"Secondly we doubt that the current clearance sale signals the end of the carry trade for 2003," Mr Bayley said.
"We are yet to see a broad and sustained pickup in US activity data and see scope for another round of disappointment, which would reinforce the yield mentality that has driven relative currency performance for much of the past 12 months."
In key data out today, the influential NZIER quarterly survey of businesses released today showed that confidence has lifted off the floor, but remained depressed for the third quarter.
The survey showed a net 20 per cent of firms were pessimistic about business conditions over the next six months, against 36 per cent in the last survey.
In Tokyo today the yen remained upbeat on optimism about the outlook for Japan's economy on brightening corporate sentiment, robust macro economic data, and the rally in stocks.
In Wellington at 5pm the euro was trading at $US1.1341 compared with $US1.1384 yesterday, while the US dollar was fetching 117.81 (118.37).
On the crosses at 5pm the kiwi was buying A89.03c (A89.14c yesterday), 68.41 yen (69.81), 35.52 pence (36.07), 0.7889 Swiss francs (0.8072), and 0.5120 euro (0.5208).
The monetary conditions index was at plus 230 (301), the trade-weighted index was at 62.04 (62.94) and 90-day bank bill yields were at 5.15 per cent (5.14).
The February 2005 yields were at 4.84 per cent (4.85), the November 2006s were steady at 5.01 per cent, and the November 2011s were at 5.38 per cent (5.39).
- NZPA
<i>Currency:</i> Sell-off in dollar bloc continues to hurt Kiwi
AdvertisementAdvertise with NZME.