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NZ dollar tests lows at the start of the week

Monday 14th January 2013

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The New Zealand dollar is testing support levels at the start of the week after profit-taking from higher levels shunted it lower on Friday.

But dealers say a return of upward momentum is likely this week depending on events offshore, the most important of which will be the performance of banks in the US reporting season.

The kiwi fell to 83.71 US cents at 8am from 84.25 US cents at 5pm on Friday, which was down from 84.46 cents in the morning on Friday.

The kiwi has support at 83.55 US cents after options barriers at 84.00 US cents were taken out last week, said Stuart Ive, currency strategist at HiFX.

"At the moment we'll probably respect that support for the time being and as we edge into the day see if we get any buying come into the market after the sell-off late last week," Mr Ive said.

He said nothing had changed in terms of global and domestic issues. Australian employment data this week may affect the Kiwi-Aussie cross rate and the performance of companies in the US reporting season will provide information on the health of the US economy.

"A lot of the moves last week were down to the Bank of Japan adding a big stimulus to their economy, which was added to on Friday.

"The Bank of Japan do not meet until next Monday and it is actually a holiday in Japan today so it's going to be quiet in Asia," Mr Ive said.

The trade-weighted index fell to 75.11 from 75.61 on Friday.

The kiwi was at 74.72 yen from 74.95 on Friday. It was at 62.73 euro from 63.56 on Friday and at 79.41 Australian cents from 79.62 on Friday.

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