NZ dollar stays under US69c

The New Zealand dollar bumped along a plateau today, before its latest attack on the US69c resistance level petered out, again.

It was just short of a one year-high and some commentators suggested that it could be towed further upward by the Australian dollar, which has made ground against the US dollar, to head for US70c, but the assault again failed.

After buying US68.86c, at 8am, the NZ dollar at one point reached US68.97 to match its performance last Friday when it climbed from a two-week low near US66.80c early on Thursday. At lunchtime, it was clinging on at US68.96c, but by 5pm was dragging its tail at US68.81c. By comparison, the Australian dollar finished the afternoon at US85.20c.

The kiwi has pushed above US68.90c several times in recent weeks, and the Westpac Bank said in a foreign exchange outlook that as long as the aussie maintained its gains, the kiwi was like to break higher.

But the same commentators are also picking a significant correction will be seen in the next few months: "At some point the NZ dollar will correct the post-March rally ... but a sustained break about US69c today would tell us that correction won't happen this week".

The ANZ Bank expects the NZ dollar to be subdued in the next 48 hours with a holiday in the USA overnight, with support levels coming under pressure ahead of the Reserve Bank's interest rate announcement on Thursday. No change is expected in the policy rate, but Westpac speculated that the working of the final paragraph may be altered to reflect a lower probability of further rate cuts - a positive note for both the dollar exchange rate and interest rates.

The ASB Bank said it saw a good case for a further cut to the OCR, arguing that the exchange rate and rising term rates were a threat to the economy

At 5pm the NZ dollar was at A80.77c against the Australian dollar, down slightly on A80.89c at 8am.

The kiwi was also buying 0.48.01 euro at the close, compared with the opening of from 0.48.16c, and was up at 64.1 yen.

The trade-weighted index was down fractionally, to 63.55, up to from 63.63c at 8am - but still better than the 62.93 at 5pm on Friday.

- NZPA