The New Zealand dollar failed to break through its recent highs this week to achieve a new record, as it resisted a test of 88 US cents.
The kiwi was at 87.49 US cents at 5pm in Wellington, from 87.75 cents at 8am on Monday. The trade-weighted index was little changed at 81.43 from 81.50 on Monday.
Most traders and strategists in a BusinessDesk survey expected the kiwi this week to break through last week's three-year high of 87.94 US cents and push through its post-float record of 88.40 cents as investors favour the higher yields available from the nation's rising interest rates in a global environment of low rates. While the kiwi failed to break though, reaching a high of 87.91 cents, it remained elevated above 87 cents, even after better than expected US jobs data strengthened the greenback and buoyed optimism about the world's largest economy.
"What a week! It's come under a lot of pressure," said Peter Cavanaugh, client advisor at Bancorp Treasury Services. "There seems to be an amazing degree of resistance at 88 cents, it just does not want to go through there but equally it doesn't want to go down. There is some underlying support for the New Zealand dollar, it is caught between two close but opposing forces.
"We have got long term pressures which would imply it is going to go down but equally you can't stand in the way of a freight train in the form of global investors' hunt for yield," Cavanaugh said. "It's almost as if it is a couple of invisible force fields."
The kiwi was expected to trade between 86.40 US cents and 89.90 cents this week, according to the BusinessDesk survey of 10 traders and strategists. Seven predicted the kiwi would rise this week, while two picked it to decline and one expected it to remain largely unchanged
The New Zealand dollar was trading at 93.43 Australian cents at 5pm, up from 93.15 cents on Monday and after touching a three-month high of 93.95 cents this week on increased expectations that Australia may cut interest rates.
The local currency was little changed at 64.28 euro cents from 64.30 cents on Monday after European Central Bank president Mario Draghi this week affirmed the bank's low interest rate policy. The kiwi advanced to 50.95 British pence from 51.49 pence on Monday and rose to 89.27 yen from 89.02 yen.