Dollar struggles through to close

The New Zealand dollar continued to struggle after falling sharply yesterday on cautious comments from the Reserve Bank of New Zealand (RBNZ).

It was at US72.18c at 5pm from US72.38c at 5pm yesterday.

The NZ dollar dived yesterday on comments made by Reserve Bank Governor Alan Bollard, when he raised the official cash rate 25 basis points to 3 percent, as widely expected.

Dr Bollard said the pace and extent of further increases was likely to be more moderate than was projected in the monetary policy statement on June 10, and that the outlook for economic growth had softened somewhat. Within minutes the NZ dollar fell from around US72.85c to a one-week low of about US72c.

The NZ dollar is also at its lowest level against the Australian currency since May. From A80.71c at 5pm yesterday, it closed today at A80.17c, having traded to around A80c.

ANZ bank said support levels had broken and an eventual move by the NZ dollar towards A79.74c should now take place.

The US dollar fell to an eight-month low against the yen today as Japanese investors sold ahead of US gross domestic product data on Friday US time.

The data will shed light on the debate about whether or not there will be a double-dip recession. Economists expect US growth to have slowed slightly.

They are also looking ahead to next week's household labour force survey here. Last quarter's strong report was one of the most surprising the market has seen.

"The labour market picture was seemingly so inconsistent with the slow emergence from recession suggested by other data," Westpac said.

"The fairest assessment is that this quarter's data is highly uncertain. While we are forecasting slow employment growth and marginally higher unemployment, we acknowledge that the range of plausible outcomes is wide," Westpac said.

The NZ dollar was down to 0.5518 euro at 5pm from 0.5560 at the same time yesterday, and was at 62.35 yen from 63.08. The trade weighted index was down to 67.12 at 5pm from 67.57 yesterday.

- NZPA