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NZ Dollar Steadies After Dumping

Contributor:
Fuseworks Media
Fuseworks Media

Wellington, May 9 NZPA - The New Zealand dollar steadied today after yesterday's dumping when Statistics New Zealand reported 29,000 jobs were lost in the March quarter.

In a quiet session compared to yesterday's frenetic action, the kiwi closed on US77.20c, little changed from yesterday's US77.28c.

Similarly, it closed little changed against the Australian dollar, ending the week on A82.08c from A82.16c. It dropped over a cent yesterday to a 21-month low.

Early today, the kiwi dropped to its lowest level in more than three months against the greenback, around US76.90c, having been around US78.20c before the jobs report came out yesterday.

The kiwi was also down to a three-week low of 79.75 yen against the Japanese currency early today. It closed on 79.93 against 80.69 at yesterday's local close.

The trade weighted index ended the week on 69.11 from 69.44.

In major markets, the euro held firm against the US dollar after rebounding from a two-month low on reduced expectations for European Central Bank rate cuts.

ECB President Jean-Claude Trichet said inflation remains his top concern, suggesting the bank won't cut interest rates anytime soon.

Dealers said the the euro, like the kiwi, could stay under pressure as the market focus shifts to selling currencies with a deteriorating growth outlook.

"Concern about slowing euro zone growth is still making the euro vulnerable," said a trader at a Japanese bank, adding that similar concern was also hurting the New Zealand dollar despite its high-yielding status.

The Australian dollar fell on such growth worries after the Reserve Bank of Australia said in its quarterly monetary policy statement that a significant slowdown in demand would help curb inflation pressures.

Investors perceived the RBA's remarks as reducing the chances of a near-term interest rate rise after it kept rates unchanged earlier this week at 7.25 percent.

Persistent fund outflows by Japanese margin traders capped the yen's gains as data showed that they were huge buyers of the New Zealand dollar even during its 2 percent slide against the yen yesterday.

The margin traders are known for buying higher-yielding currencies on dips but sometimes get burned when there is a big unwind of carry trades.

NZPA WGT Reuters sml cw

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