KEY POINTS:
The New Zealand dollar hovered near two-week highs as investors waited to see if the yield gap between the US and kiwi dollars would grow.
The kiwi traded quietly in a narrow range of around US77.65c-US77.87c, compared with US77.60c yesterday.
But dealers said all eyes will be on the US again tonight, where the Federal Reserve is expected to slash interest rates by up to 50 basis points, on top of last week's emergency 75 basis point cut.
If such cuts are accompanied by more relatively positive US economic data, traders say there could be a stampede back into riskier investments, which is expected to support the kiwi dollar with its high interest rates.
"The carry trade will be back in vogue and the US dollar will likely struggle, especially against the euro and the commodity currencies," Mark Frey, head trader with Custom House in British Columbia, said.
December new building consent figures for New Zealand out today fell 5.2 per cent, the lowest in six years, pointing to a slowdown in the housing market.
Against the Aussie dollar, the kiwi was stable, closing at A87.64c (A87.49c yesterday).
The trade weighted index stood at 71.49 from 71.30 yesterday.
Meanwhile the greenback was steady against most of its trading partners as investors awaited the Federal Reserve's decision.
The dollar dipped to 106.92 yen from nearly 107.10 in late US trade, but was little changed against the euro at $1.4770.
Currency rates:
NZ dlr/US dlr US77.81c US77.60
NZ dlr/Aust dlr A87.64c A87.49c
NZ dlr/euro 0.5269 0.5255
NZ dlr/yen 83.12 82.69
NZ dlr/stg 39.07p 39.10p
NZ TWI 71.49 71.30
Australian dollar US88.79c US88.70c
Euro/US dollar 1.4768 1.4767
US dollar/yen 106.81 106.50
- NZPA
- NZPA
