A declining yen and a late afternoon selloff in favour of Australian currency kept the New Zealand dollar under pressure throughout yesterday's trading.
"Basically the tone's been bearish all day," said an ANZ currency strategist.
Trading within a 12 point range the kiwi closed at US41.14c, compared with US41.42c at Thursday's close.
The Australian dollar did little better, closing at US50.69c, compared with US51.05 Thursday.
Dealers expected the kiwi to test the downside below US41c overnight, travelling between US41.20c- US40.80c with medium-term support around US40.50c.
One dealer said Christmas lethargy was not a reason for the kiwi's unmotivated state.
"Last year we actually had quite a good rally into the Christmas period, but just generally it's a combination of the extraordinarily weak yen and the Argentinian debt crisis, (which is) creating a safe haven-type demand again for the US dollar."
During the course of yesterday's trading, the yen fell nearly 70 points to close at US129.36 against the greenback.
There was no reaction to yesterday's GDP figures which showed a drought-affected New Zealand economy had slowed to a growth rate of just 0.2 per cent in the September quarter.
A new consumer survey showing confidence had perked up here helped the kiwi to stage a short-lived rally against the aussie before closing at A81.16c (A81.14 close yesterday).
It eased against most major currencies, trading at 53.18 yen (53.31 at Thursday's close), 28.35 pence (28.58), 0.8924 marks (0.9015), 0.6696 Swiss francs (0.6792) and 0.4563 euros (0.4609).
The Australian dollar was buying $NZ1.2323 kiwi compared with $NZ1.2328 at Thursday's close.
The trade-weighted index was at 49.51 (49.81), the 90-day bank bills were steady at 4.85 per cent and the monetary conditions index eased to minus 927 from minus 897 at yesterday's close.
On the debt market bonds were sold. The March 2002 bonds were flat at 4.75 per cent, the April 2004s rose to 5.59 per cent (5.54), the November 2006s were at 6.22 per cent (6.17) and the November 2011s were at 6.69 per cent (6.63).
- NZPA
<i>Currency:</i> Yen keeps Kiwi, Aussie pinned down
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