The New Zealand dollar is heading into the end of the week largely unchanged against the greenback after the Federal Reserve's move to keep open a potential rate hike was offset by improving economic data and a local central bank happy to delay an interest rate cut.
The kiwi traded at 67.39 US cents at 5pm in Wellington from 67.46 cents on Friday in New York. It was up from 66.93 cents at 8am and 66.60 cents yesterday. The trade-weighted index advanced to 72.99 from 72.23, and is heading for a 0.6 per cent weekly decline.
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The local currency got a boost yesterday after domestic business confidence improved for a second month as a rebound in dairy prices helps alleviate some of the gloom hanging over the rural sector. That followed the Fed's policy review, which kept alive a rate hike in December as the world's biggest economy shows robust activity, while New Zealand's Reserve Bank said it still plans to cut rates again, but won't factor in the recent currency appreciation unless it's sustained.
"With the domestic strength and the 'waiting and seeing' [from the Reserve Bank], there's a lack of a catalyst" to push the kiwi lower, said Sam Tuck, senior FX strategist at ANZ Bank New Zealand in Auckland. "Close to 68 (US cents) and above we expect a pretty decent offering, but we don't immediately see a catalyst for a drive lower."
