NZ Dollar: Kiwi back to where it started 24 hrs ago

The New Zealand dollar opened locally little changed against the greenback from its level 24 hours earlier, but the journey between the two points was bumpy.

Around 8am today the kiwi was buying US63.42c, up from US62.97c at 5pm yesterday, having briefly dipped to a week-low around US62.20c about midnight.

BNZ Capital currency strategist Danica Hampton said flows seen to be associated with the unwinding of currency hedges for the proposed deal between Chinalco and Rio Tinto sent the Australian dollar and the British pound sharply lower.

"... so of course the NZD trailed in their wake."

For a period of time in the London afternoon the sharp sell off in sterling and the aussie held sway for traders and clients alike, said Hampton.

But eventually a mix of real money and macro accounts showed a bias to sell the US dollar and sparked a recovery to this morning's opening levels.

The NZ dollar opened locally generally stronger, compared to levels at 5pm yesterday.

It was buying 0.4472 euros at 8am from 0.4447, was up to 61.38 yen from 60.56 at 5pm, and lifted to A$79.03c against the aussie at 8am from A78.70c. The trade weighted index was 59.84 at 8am from 59.44 at 5pm.

The euro rose against the US dollar in choppy trading as European Central Bank President Jean-Claude Trichet signalled the ECB will keep interest rates steady at a record low of 1 per cent for some time.

The US dollar's fall against commodity-linked currencies such as the NZ, Canadian and Australian dollars, was against the background of a rise in oil and gold prices. Higher oil prices also boosted energy shares, lifting the US stock market and adding to the market's overall risk appetite.

- NZPA