NZ dollar retreats from overnight highs as technical sellers emerge vs. Aussie
The New Zealand dollar retreated from its overnight highs against the Australian dollar and the greenback after nearing levels on the cross rate it has failed to breach before, attracting chart watchers and speculative sellers.
The kiwi traded at 95.76 Australian cents at 5pm in Wellington, from 95.79 cents yesterday. It earlier rose to as much as 96.29 cents, nearing the post-float record of 96.52 cents it reached on Jan. 8. The local dollar fell to 74.47 US cents, having earlier climbed as high as 74.85 cents, from 73.43 cents.
The kiwi has rallied against its Australian counterpart since Australia's central bank cut its cash rate to 2.25 percent and New Zealand's Reserve Bank kept its official cash rate unchanged at 3.5 percent and said monetary policy was in neutral. Traders are betting there's a 62 percent chance the RBA cuts again in March and a rate cut in April is fully priced in. Governor Glenn Stevens told the parliament's economic committee today that rate cuts may not be as effective in stoking the economy as they were in the past, when credit demand was higher.
"We're finding natural sellers again" in the kiwi against the Australian dollar, said Martin Rudings, senior dealer at OMF. "It is getting close to historical highs - once in the zone it attracts sellers and speculators."
On a fundamental basis, the kiwi should probably stay elevated against its Australian counterpart, given expectations the interest rate differential is going to widen out, he said.
The kiwi traded at 65.20 euro cents, up from 64.90 cents late yesterday. Talks between Eurozone leaders and Greece over the country's debt burden and the austerity measures imposed with its bailout were unresolved this week and aren't scheduled to resume until Monday.
The local currency traded at 48.31 British pence, little changed from 48.23 pence yesterday and was little changed at 88.26 yen from 88.30 yen. The trade-weighted index rose to 77.14 from 76.95.
