10 June 2009

Source: stuff.co.nz

The New Zealand dollar gained on a fading greenback but slipped to its lowest level in almost three weeks against its Australian counterpart.

By 8am today the kiwi was buying US62.70c, up from US61.86c at 5pm yesterday. Against the Australian dollar the kiwi was down to A78.22c, having dropped to around A78c earlier, from A78.50c at yesterday's local close.

ANZ bank said support for the NZ dollar around US61.80c was clearly evident yesterday and overnight. Offshore demand and a weaker United States dollar were enough to help lift the NZ dollar from its lows.

The kiwi moved higher by default rather than on merit, with its fortunes still largely in the hands of the US dollar although tomorrow's interest rate announcement by the Reserve Bank should have some short term impact, ANZ said.

The NZ dollar edged down to 0.4454 euros at the local open, but gained on the Japanese currency to 61.08 yen at 8am from 60.70 at the local close. The trade weighted index rose to 59.34 at 8am from 59.10 at 5pm.

The US dollar fell broadly, ending a two-day winning streak, as investors questioned whether the economy had improved enough to justify talk of higher US interest rates by year end.

The US Treasury said 10 of the country's biggest banks could repay US$68 billion (NZ$111.9b) in taxpayer money received during the height of the credit crisis, boosting hopes the worst is over.

Nonetheless, investors were growing less certain that the Federal Reserve would raise rates in 2009, a view that had gained traction last week after data showing a slower pace of US job losses in May boosted the dollar and two-year Treasury yields.