The New Zealand dollar bounced back to break through US81.80c and reach US81.85c at 5pm after continuing to slip against the greenback early today after data showed a sharp slowdown in job creation in the United States.
The New Zealand dollar bounced back to break through US81.80c and reach US81.85c at 5pm after continuing to slip against the greenback early today after data showed a sharp slowdown in job creation in the United States.
It reached an intra-day high of US81.86 just before 5pm, as Australia's central bank held interest rates steady at 4.75 percent -- as widely expected -- but surprised some by omitting a warning that policy would likely have to tighten in coming months to contain inflation.
The NZ dollar was US81.45 at 5pm on Friday, down from its high a week ago, when it reached US82.61 and stayed above US82c for two days.
The NZ dollar cross-rate against the aussie also finished higher today: A76.54c at 5pm and up from A76.28c at the same time on Friday. Over the holiday weekend, the kiwi had fallen to its lowest level against the aussie in more than a week, bottoming below A75.80c.
Similarly, the Australian dollar lifted against the US dollar, to $US1.0692, compared with $US1.0672 at 5pm on Friday.
At 8am today the kiwi was buying US81.33c -- early on Saturday it was below US80.80c, its lowest level in about a week.
Trading through the rest of the week is expected to pivot around the Reserve Bank of New Zealand's announcement due on Thursday, when it is expected to follow Australia's example and keep the official cash rate on hold at 2.5 per cent.
Reserve Bank Governor Alan Bollard has previously signalled that the strength of the NZ dollar could affect the local economic recovery: the latest Government's financial statements today showed gross debt was 4.2 per cent higher than forecast in the first 10 months of the financial year.
A jump in finance costs by $559 million was driven by gross debt hitting $71.6 billion for the 10 months ended April 30, which was $2.9b more than forecast, and up $19.6b from the same period last year.
Westpac Bank's foreign exchange outlook today for the NZ dollar
US dollar exchange rate noted that Thursday's RBNZ announcement -- a full monetary policy statement, with a 90-day rate forecast out to three years and a full set of economic forecasts -- could hurt sentiment underpinning the kiwi.
It said there was still a high possibility of a fresh high during the next month, "in the absence of any obvious signs of a reversal".
Beyond that, Westpac predicted early signs of a global slowdown in the second half of 2011 would emerge.
The NZ dollar fell to 0.5602 euro at 5pm, down from the same time on Friday, when it was 0.5624 euro.
It was also down slightly to 65.75 yen from 65.77 at 5pm on Friday.
The trade-weighted index rose to 70.15 points at 5pm, from 70.11 on Friday.
