Kiwi holds against broadly weaker greenback

Friday 25th February 2011

After a dip down to around US74.30c against the greenback, the NZ dollar managed to hold above US74.60c for most of the overnight session as it pulled away from the lows after the Christchurch earthquake on Tuesday.

But the kiwi continued lower against the Australian dollar, dropping at one point to around A74c -- a level, which apart from a dip two months ago, was last seen in 2000.

By 8am today the NZ dollar was at A74.12c, from A74.21c at 5pm yesterday.

The US dollar tumbled broadly, with further losses seen amid a surge in oil prices as investors feared a civil uprising in Libya could spill over to other top producers including Saudi Arabia.

Further hurting the US dollar - especially against the euro - were comments by St Louis Federal Reserve President James Bullard saying the Fed can "never say never" to another round of quantitative easing, a scenario that typically undermines the greenback.

In contrast, the European Central Bank continued its hawkish rhetoric, with ECB policymaker Axel Weber saying the only way for euro zone rates to go is up.

ANZ bank said the NZ dollar should consolidate today, having survived, for now, several tests of key support at US74.40c.

Profit taking from recent positions and more attractive cross levels had helped in placing the base around that level.

The NZ dollar slipped from 0.5428 euro at 5pm to 0.5410 at 8am, and was down to 61 yen from 61.42. The trade weighted index dropped to 66.08 at 8am from 66.22 at 5pm.

NZPA

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