KEY POINTS:
The dollar remained attractive yesterday, despite being trumped by Australia's unemployment figures which pointed to further rate rises across the Tasman.
The kiwi hit a one-month low of US73.22c after yesterday morning's data showed New Zealand's unemployment rate inched up slightly, to 3.8 per cent, despite record high employment.
The figures were considered unlikely to push the Reserve Bank into raising interest rates.
The kiwi later recovered on the back of the Australian dollar after Australia's jobless rate sank to a 32-year low of 4.4 per cent, raising the spectre of higher inflation and interest rates.
By 5pm, the kiwi was at US73.40c, but down from Wednesday's level of US73.65c. The kiwi reached a session high of US73.60c.
Against the Aussie, it was at A88.22c, down from A88.88c late Wednesday.
"We've seen people selling kiwi, or buying the cross (rate), where we've seen the Aussie appreciate quite dramatically after their employment figures which were much, much higher than the market expected," one dealer said.
A lot of investors bought long kiwi/short Aussie positions - betting the kiwi would rise against the Australian dollar - after weaker than expected Australian inflation data late last month.
"What we've seen is a big trimming down of those positions, where the Aussie's become the favourite and the kiwi's lost its gloss," he said.
The US dollar was steady against the yen and euro, holding on to gains made after the Federal Reserve kept benchmark US interest rates steady at 5.25 per cent and said its main worry was that inflation would fail to moderate.
While the Fed's statement was in line with expectations, it doused speculation that it might cut interest rates more than once this year.
The ANZ Bank said yesterday the Fed's moves meant the kiwi dollar had real downside potential for the first time in weeks as the greenback found its feet.
- NZPA
