The New Zealand dollar made small gains against the United States and Australian currencies, and pulled back a little against the euro, pound sterling and the yen as global markets waited on a politically important vote in Greece.
The New Zealand dollar made small gains against the United States and Australian currencies, and pulled back a little against the euro, pound sterling and the yen as global markets waited on a politically important vote in Greece.
Greece could default on its debts as soon as next month without overseas loans, but Greek Prime Minister George Papandreou was tonight facing a confidence vote in his bid to win backing for a new round of spending cuts, tax hikes and state asset sales needed to secure those loans.
The 12 billion euro lifeline is need to avoid the euro zone's first sovereign debt default, with many investors calculating the sick man among Europe's economies will not be abandoned.
"In the big scheme of things, market players are starting to believe that euro zone policymakers, especially German policymakers, will try to avoid a hard landing in Greece," Makoto Noji, senior strategist at SMBC Nikko Securities told Reuters.
"Although the Greek debt situation seems unsustainable, Europe cannot afford to let Greece fall,'' said Ashraf Laidi, an analyst with Intermarket Strategy in London.
The NZ dollar fell against the euro, to 0.5646 at 5pm, against 0.5668 at the same time yesterday.
The kiwi lifted to US80.96c at 5pm, compared with US80.65c on Monday. It climbed steeply from US80.43c in the early hours of the morning to US81.18c before dawn, then spent the day bouncing along, apparently driven by short-term players.
It was fractionally down against the British pound, to 49.94p at 5pm from 50.03p on Monday, but up against the yen, to 64.90 at 5pm, compared with 64.68 the previous day.
The NZ dollar lifted to A76.71c against the Australian dollar, compared with A76.40 at 5pm on Monday, as the aussie slipped when minutes of the Reserve Bank of Australia's June meeting showed the bank thought recent data had not added any urgency to the need for tightening interest rates.
In the context of the kiwi climbing off a session low as it benefited from cross selling against the Aussie, Daniel Brdanovic, chief manager Treasury at HSBC in Auckland told Reuters: "All the moves came from selling Aussie, buying kiwi".
"It's still a risk-off environment, but if you look at the bigger picture, the kiwi is supported quite well," he said.
The trade-weighted index (TWI) against a basket of currencies from key trading partners was 69.96, up from 69.87 at 5pm on Monday.
Against the greenback, the aussie was worth $US1.0555, the same as Monday, while the euro lost a little ground to $US1.4337 at 5pm, compared with $US1.422. The yen lifted only a little against the US dollar, to 80.30, from 80.20 a day earlier.
ANZ said the Greek crisis had kept currency markets stalled and looking for direction.
"The market thinks the confidence vote will pass. Still, should it fail, the euro will be dumped massively, so it is hard to take large risks now," said a trader at a Japanese brokerage.
But some market players were going long on the euro on hopes that the vote would pass, traders said.
