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Kiwi moves higher but trades in narrow range

Thursday 3rd March 2011

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The NZ dollar rose today after being knocked down yesterday when Prime Minister John Key commented on interest rates.

The NZ dollar was at US74.41c at 5pm from US74.36c at 8am and US74.09c at 5pm yesterday.

The NZ dollar plunged to a 10-week low yesterday after Key said he expected the Reserve Bank of New Zealand to cut interest rates.

The NZ dollar rose overnight and today. Dealers said the move mostly reflected a period of US dollar weakness, and sterling and the euro have also been stronger.

The NZ dollar traded in a very narrow range and trading was also subdued in other currencies as investors waited for non-farm payroll data in the US at the end of the week.

Against the aussie, the NZ dollar took a look at a key technical level, following Key's comments and after data showed a strong, although mixed in parts, 0.7% rise in Australia's gross domestic product in the December quarter, ANZ said.

The NZ dollar fell to around A72.95c early today, its lowest level against the Australian currency in 18 years, then edged up to A73.25c at 5pm, having been around A73.70c before yesterday's dive.

The kiwi dropped to its lowest level in more than four months against the euro, dipping below 0.5350 euro early today, having been around 0.5420 early afternoon yesterday. By 5pm today it had clawed back a little lost ground to 0.5370.

The NZ dollar also dropped from 61.20 yen before Key's comments to near 60.40 yen by mid-afternoon yesterday, the lowest level in more than four months, and by 5pm today was up to 60.89 yen.

The trade weighted index was 65.67 at 5pm, little changed from 65.58 at the same time yesterday.

The US currency has been unable to benefit from the recent spike in risk aversion amid political tensions in the Middle East and North Africa, prompting some investors to question whether the greenback has lost its safe-haven status.



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