NZ dollar in narrow range vs greenback ahead of budget

Thursday 19th May 2011

The New Zealand dollar traded in a narrow range against the greenback ahead of today's budget, and as commodity prices rallied on a rebound from steep declines. The kiwi spent most of the night in a band between US78.50c and US79c, to be buying US78.83c at 8am which was similar to its level at 5pm yesterday. It also edged up to 0.5536 euro at 8am from 0.5522 at 5pm. The euro fell against the US dollar as minutes from last month's United States central bank meeting raised expectations that inflation could spur an interest rate hike sooner than expected. Some Federal Reserve policymakers said they saw a rise in inflation risks, suggesting the Fed might need to tighten monetary policy sooner than currently anticipated.

ANZ said that after exploding through topside resistance yesterday with consummate ease, the NZ dollar had continued to find support from offshore and local buyers ensuring dips were limited.

Markets would be focused on the budget, and the kiwi was likely to trade within a narrow range leading up to it.

Close attention would be paid to borrowing levels and whether they were likely to safeguard New Zealand's credit rating.

The NZ dollar edged up against the Australian dollar overnight to A74.21c at 8am from A74.04c at 5pm, and rose to 64.38 yen from 63.97. The trade weighted index was 68.36 at 8am from 68.24 at 5pm.

NZPA

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