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The New Zealand dollar was little changed as investors seeking to benefit from the carry trade favoured the Australian dollar over its New Zealand counterpart, amid expectations US monetary stimulus will last longer than anticipated.
The kiwi was at 84.81 US cents at 8am in Wellington, little changed from 84.87 cents at the New York close Friday and up from 84.60 cents at the 5pm market close in Wellington. The kiwi slipped to 87.68 Australian cents from 87.86 cents on Friday.
The US dollar index, which measures the greenback against a basket of currencies, declined on expectations the Federal Reserve will delay tapering its monetary stimulus programme following this month's government shutdown. Investors borrowing in low-interest-rate currencies to buy higher-yielding assets are betting the Australian dollar, which has gained 4.5 percent the past three months, has higher to go, compared with the kiwi which has increased 6.5 percent in the same period.
"Currency markets continued to push back tapering expectations, weakening the US dollar," Sharon Zollner, senior economist at ANZ New Zealand, said in a note. "The carry story should benefit the Australian dollar more than the New Zealand dollar."
Traders are expecting a slew of economic data to be released in the US this week as government offices re-open following a two-week shutdown.
In New Zealand today, data on net migration for September is scheduled for release at 10:45am while September credit card spending is due at 3pm.
The New Zealand dollar was little changed against other major currencies, at 82.87 yen from 82.90 yen on Friday, 52.42 British pence from 52.37 pence and at 61.97 euro cents from 61.89 cents. The trade-weighted index edged up to 78.12 from 78 on Friday.