KEY POINTS:
The New Zealand dollar swung in choppy trading today as markets considered the implications of the latest US Federal Reserve interest rate cut.
By 5pm, the kiwi was at US78.06c, up from US77.64c late yesterday afternoon. The currency continued to recover from yesterday's three-month low of US77.25, hitting a session high of US78.50c before retreating.
"I think the market's trying to digest what the Fed said - they (traders) were looking for them to be firm on inflationary expectations, but they've been a bit softer than what they expected," a dealer said.
The kiwi had followed equity markets, which in turn were unsettled, and was pressured by a sell-off in the Australian dollar after a decline in building approvals across the Tasman.
The kiwi was a touch firmer against the Aussie at A83.16c from A83.10c yesterday afternoon, and it also made small gains against the euro and yen, pushing it to 69.61 on the trade weighted index from yesterday's 69.34.
The Australian dollar was at US93.88c, below session highs but above late yesterday's US93.45c level.
The Fed action, after a two-day meeting, pushed the federal funds rate down to 2 per cent, the lowest level since late 2004. It was the seventh rate cut by the central bank since it began easing credit conditions last September, to ward off the growing threat of US recession.
In afternoon trading, the US dollar edged down against the yen and the euro to extend its broad slide as analysts believed the Fed rate cut left the door open for more.
Currency rates:
NZ dlr/US dlr US78.06c US77.64c
NZ dlr/Aust dlr A83.16c A83.10c
NZ dlr/euro 0.4994 0.4981
NZ dlr/yen 80.97 80.70
NZ dlr/stg 39.29p 39.45p
NZ TWI 69.61 69.34
Australian dollar US93.88c US93.45c
Euro/US dollar 1.5633 1.5584
US dollar/yen 103.71 103.94
- NZPA
- NZPA
