NZ dollar eases back after overnight peak

Year-end positioning drove the New Zealand dollar to a two-week high offshore before it eased back in the domestic trading session today.

The kiwi peaked overnight to US72.12c but had eased to US71.50c by 5pm, still well ahead of its US70.73c level at 5pm yesterday.

"Offshore equity rebalancing is screwing our position for the end of the year, driving both the kiwi and aussie higher," said BNZ currency strategist Danica Hampton.

"The moves have been exacerbated by trading conditions."

Volumes were very thin and any movement could result in dramatic price action, she said.

Against the Australian dollar, the kiwi was firmer at A80.20c at 5pm from A79.78c at 5pm yesterday. It also gained against the euro to 0.4992 from 0.4927 and against the yen to 65.92 from 64.89 yesterday.

The trade weighted index stood at 65.47 at 5pm from 64.71 a day earlier.

Meanwhile, the US dollar hit two-month highs versus the yen, as the US economy continued to show signs of improvement and on year-end buying from asset managers.

US data released overnight, including a rise in US consumer confidence in December to a three-month high, certainly helped the dollar's cause, analysts said.

The US dollar was trading around 92.20 yen at 5pm.

- NZPA