KEY POINTS:
The New Zealand dollar had an uneventful night, to be little changed against major trading currencies when the local market opened today.
Around 8.15am today the kiwi was buying US69.18c, after a bounce back yesterday from a one-month low of US68.40c had taken it to US69.25c at 5pm.
The NZ dollar was also buying A88.59c this morning from A88.50c at 5pm yesterday, 0.5319 euro from 0.5312 and 82.47 yen from 82.33. The trade weighted index was at 68.66 from 68.63.
The focus overnight was the yen's broad-based decline as Japanese investors, returning to the market from a public holiday on Monday, initiated a fresh wave of selling.
That move was based on the perception that even with a widely expected interest rate hike from the Bank of Japan the yen would remain at a yield disadvantage.
ANZ Bank today said the overnight issue of $575 million in uridashi and eurokiwi (NZ dollar denominated bonds sold to Japanese and European investors) had helped cement the NZ dollar above US69c.
Other demand for the kiwi from local exporters and potential mergers and acquisition activity should ensure the NZ currency remained supported for now.
The direction for the NZ dollar would be led from offshore, primarily off the back of yield demand, ANZ said.
Overnight, the greenback rallied against the yen for a second day, and extended gains against the euro on the view that a recent spate of robust US economic data made a rate cut from the Federal Reserve less likely in the first half of this year.
A sharp fall earlier in the day in crude oil futures also served to underpin the US dollar as analysts said it would likely help shrink the US trade deficit, a major long-term concern for the greenback, and bolster consumer spending.
- REUTERS
