"It has been a bit of a roller coaster," said Hamish Pepper, fixed income and currency strategist at Harbour Asset Management.
"From the European session in the very early part of our day to the later parts of the US session when it looked quite likely that the stimulus package would be passed," Pepper said.
The rescue package is aimed at cushioning the impact of the coronavirus crisis on the US economy, especially with about a third of the population now under shutdown orders from state governors or mayors of major cities as they try to slow the spread of the Covid-19 virus.
But senators on both sides of the political divide began to express reservations. Republican senators were objecting to lowly paid workers receiving more while unemployed than they had when working while presidential candidate Bernie Sanders threatened to block the legislation if these benefits were changed.
"The market had been pricing it as a bit of a slam dunk and now there's a slight nervousness creeping in in terms of how long it will take to pass," Pepper said.
But it's important to remember how much stronger the kiwi is than even the beginning of this week when it hit lows at about 55.60 US cents, he said.
"We're more than 4 per cent higher than that now."
Previous reasons for trading kiwi dollars, such as interest rate differentials and the terms of trade, are now out the window. "It's now trading as a risk proxy," Pepper said.
"We will change back to fundamentals but, for now, that's firmly where we are."
New Zealand's shutdown began at midnight and the number of confirmed or probable infections jumped by 78 to 283 today, though nobody in NZ has died of it yet. Most of those newly infected were travellers but authorities are expecting the numbers to keep increasing until about 10 days into the lockdown.
Worldwide, the number of cases jumped to 471,311 and deaths to 21,293 today from 422,829 cases and 18,907 deaths yesterday.
The New Zealand dollar was trading at 98.58 Australian cents from 97.61 cents at 5pm yesterday. It was at 49.15 British pence from 49.46, at 53.44 euro cents from 54.02, at 64.61 yen from 64.86 and at 4.1470 Chinese yuan from 4.1271.
The bid price on the two-year swap rate closed at 0.5375 per cent from 0.5800 yesterday while 10-year swaps were at 1.0100 per cent from 1.0550 per cent.
