NZ dollar struggles to make gains

Tuesday 15th February 2011

The New Zealand dollar struggled to recover after Monday's release of weak retail sales data for December prompted it to take a dive.

The NZ dollar was at US75.72c at 5pm, just down from US75.75c at 8am, similar to US75.77 at 5pm yesterday.

ANZ bank said poor local data and a weakening euro were factors behind a testing of NZ dollar support levels.

The kiwi was unchanged against European currency at 0.5598 at 5pm, and fell slightly against the Japanese yen to 63.03.

The euro edged higher today but struggled to recover from a three-week low after reports about ailing German bank WestLB triggered another outbreak of worries about euro zone debt and banking problems.

But market players said the dollar may have room for more gains if upcoming US data paints an improving picture of the economy.

"The dollar is likely to be bought back more. Investors have come to think that the Fed will not extend its quantitative easing beyond June, and markets will try to bet on an eventual rate hike by the Fed for now," said Etsuko Yamashita, chief economist at Sumitomo Mitsui Banking Corp.

Meanwhile, spot gold inched higher after China's weaker-than-expected inflation data eased fears of more aggressive tightening moves, while persistent concerns about rising prices are expected to buoy gold in the longer term.

Against the Australian dollar, the kiwi climbed to A75.34c, after spending most of the overnight session in a tight range between A75.30c and A75.50c.

The trade weighted index fell to 67.64 from 67.74 at 8am and 67.67 at 5pm yesterday.

NZPA

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