NZ dollar down - then up again

After falling for the first part of the overnight session, the New Zealand dollar rose through the early hours of the morning to be largely unchanged by the local market open.

By 8am the kiwi was at US71.99c, barely changed from its level at 5pm yesterday having dropped to a low around US70.95c shortly after midnight.

The NZ dollar was also little changed at the local open from its 5pm level at 65.05 yen and at A79.87c against the Australian dollar. It was up on the European currency at 0.4895 euro from 0.4874 at the local close. The trade weighted index was 64.95 at 8am from 64.91 at 5pm.

Against the aussie, the NZ dollar is up from a three-month low around A79.25c reached about 10.30am yesterday.

BNZ Capital senior strategist Danica Hampton said that looking through the overnight volatility, the NZ dollar had really just spent the 24 hours to 8am consolidating between US71c and US72.50c.

Early in the night, weakness across European equities encouraged some safe haven demand for the US dollar. Against a generally firmer US dollar and lingering risk aversion, the NZ dollar sank to around US71c, Ms Hampton said.

But the kiwi's weakness against the greenback was short lived as equities in the United States clawed their way into positive territory and gold prices surged, helping underpin growth-sensitive currencies such as the NZ dollar.

A solid result last night from Fonterra's online dairy price auction, with average whole milk powder prices rising 13.7 per cent, may have helped NZ dollar sentiment, she said.

- NZPA