The New Zealand dollar fell sharply yesterday as sentiment turned from bullish to bearish.
Dealers blamed the Bali bombing for the shift in sentiment with traders anxiously awaiting the reopening of the US market following the Columbus Day holiday to see where US traders take it.
Until the Bali bombing on Sunday, the kiwi had been benefiting from ``momentum'' trading on the upside. However, some traders believe the momentum could now reverse.
A Wellington dealer said the kiwi had been teetering all day and after stop losses were triggered at US47.75c, it fell back to US47.59c in mid-afternoon.
She said while its closing level of US47.60c appeared to be holding ``there is still downside risk for the kiwi and aussie''.
The kiwi closed on Monday at US47.85c.
The Australian dollar closed at US54.57c, unchanged from Monday's close. The Wellington dealer said the US54.50c level was important from a chart viewpoint.
Consumer Price Index data showing a less-than-expected 0.5 per cent rise in the September quarter held little interest for the local forex market.
The benign figure meant there was little prospect of a change in interest rates for some time.
On the crosses, the kiwi weakened significantly. It ended at A87.25c (A87.62c), 0.4822 euro (0.4843), 59.30 yen (59.28), 0.3058 pence (0.3062) and 0.7048 Swiss francs (0.7080). The Australian dollar lifted to $NZ1.1460 ($NZ1.1402).
The New Zealand dollar trade-weighted index fell to 54.86 (55.07), the 90-day bill yield closed at 5.87 per cent (5.89) and the monetary conditions index eased to minus 312 (minus 293).
In the bond market, the April 2004 bond closed at 5.66 per cent (5.65), the November 2006 yield at 6.00 per cent (5.99), and the November 2011 bond at 6.25 per cent (6.24 per cent).
- NZPA
<i>NZ stocks:<i> Kiwi takes a dive on Bali bombing concerns
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