NZ dollar mixed against major trading partners in low liquidity market

The New Zealand dollar was mixed against major currencies as it suffered from low liquidity and a lack of new data during the holiday period.

The kiwi was little changed at 81.55 US cents at 8am in Wellington, from 81.45 cents at the New York close and 81.56 cents at 5pm in Wellington on Friday.

"It is the holiday season and nothing is happening. We have no data today and very little in terms of weekend news," said Stuart Ive, senior adviser at OMF. "Thin liquidity likely helped exaggerate market moves. It's very much a mixed bag at the moment."

In an otherwise quiet week for currency markets, investors will be eyeing a speech by Federal Reserve Chairman Ben Bernanke for further clues about the central bank's plans for tapering its stimulus.

Dr Bernanke, who is set to discuss the changing Fed in Philadelphia on Friday, might offer additional guidance after the Fed earlier this month announced it will reduce its monthly pace of bond purchases to $US75 billion in January, from $US85 billion.

US 10-year bond yields edged up above 3 percent last week, touching their highest level in more than two years on optimism a revival in the world's largest economy will see the Fed continue with its tapering.

Philadelphia Fed Bank President Charles Plosser and Fed Governor Jeremy Stein are also scheduled to speak in Philadelphia on Friday, while Richmond Fed Bank President Jeffrey Lacker will talk about the economic outlook in Baltimore.

The kiwi will probably drift lower against the greenback until trading picks up after the holiday period, with support currently at about 81.30 US cents, said OMF's Ive.

The New Zealand dollar advanced to 91.97 Australian cents at 8am in Wellington from 91.77 cents at 5pm on Friday.

The kiwi weakened to 59.29 euro cents from 59.38 cents on Friday, touching 58.82 cents over the weekend, its lowest level in almost four months.

Comments in Germany's Bild newspaper from Jens Weidmann, the Bundesbank chief and a member of the European Central Bank Governing Council, helped the euro. He was reported saying low inflation shouldn't be used to justify loose monetary policy.

The local currency fell to 49.50 UK pence from 49.60 pence on Friday , touching an 18-month low of 49.29 pence over the weekend. Strong UK mortgage data is bolstering expectations the Bank of England may raise interest rates sooner than previously anticipated.

The New Zealand dollar rose to 85.77 yen from 85.47 yen on Friday, as a renewed appetite for risk weighed on the low-yielding Japanese currency. Also denting the yen, many economists expect the Bank of Japan to take additional easing steps to counter the impact of a sales tax hike in April, according to Reuters.

(BusinessDesk)