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NZ Dollar Consolidates Above Six-Year Low

Contributor:
Fuseworks Media
Fuseworks Media

Wellington, March 3 NZPA - The New Zealand dollar consolidated its position today, after touching US49.10c.

At 5pm today it was worth US49.68c, up from US49.30c at the same time yesterday.

Most of the rise came immediately after the Reserve Bank of Australia announced it was leaving its key cash rate at 3.25 percent.

Today the kiwi touched a low of US49.10c. There were "dribs and drabs of news" as the kiwi essentially consolidated after reaching a six-year low yesterday, said BNZ Capital currency strategist Danica Hampton.

Yesterday's break below US49.65c was quite significant on a technical level and did encourage selling from momentum and technical driven funds, she said.

"I think a lot of people got excited yesterday that the break might have been a new signal for a new leg low in the currency. That was definitely a key level but the fact that it's failed to kick on today I think has a lot of accounts quite frustrated with the performance."

The kiwi was now showing a bit of consolidation but if there was a break below US49.10c then it could push lower, she said.

There is little local news on the horizon apart from ANZ commodity price index and the wholesale trade figures for the quarter and eyes will be on global events.

BNZ's short term fair value model suggested between US50c and US52c was probable an appropriate value.

"To see it push significantly lower from here we will need to see further bad news -- whether that's a downgrade in our ratings or a more aggressive than expected rate cut from the RBNZ next week."

The kiwi was down to A77.60c at 5pm from A77.90c at 5pm yesterday.

Against the euro it was up to 0.39.34 from 0.3922, up to 48.45 from 48.10 against the Japanese yen and down to 35.24p from 34.66p against the British pound.

The trade weighted index was up to 51.29 from 51.04 yesterday.

Meanwhile, the US dollar and yen held steady against the euro on Tuesday after the European currency's retreat the previous day as declines in global share prices and increased worries about the financial system fanned aversion to risk.

The dollar index, a gauge of its strength against a basket of six other major currencies, hit a three-year high.

The dollar was flat from late US trade the previous day at 97.46 yen after stooping to 96.99 yen earlier on trading platform EBS. Japanese importers were seen to have scooped up the dollar on dips. The dollar reached a 3-month high of 98.72 yen last week.

The euro was little changed at 122.69 yen after touching 121.73 yen on EBS. It poked above 126.00 yen last week to a seven-week high.

The dollar index dipped 0.3 percent to 88.768 after hitting a new three-year high of 89.026.

The euro edged up 0.2 percent to $1.2599, trimming some of the losses suffered in the wake of European Union leaders' rejection of a mass bailout for Eastern Europe, which weighed on the single currency the previous day.

NZPA WGT Reuters dw gt

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