NZ dollar consolidates above US70c ahead of holiday

December 24 - Close

The New Zealand dollar consolidated in a fairly narrow range above US70c in subdued trading ahead of the Christmas holiday break.

It fell below US70c on Wednesday on weaker than expected gross domestic product data but the move was short-lived as the US dollar came under pressure from a home sales report.

The 0.2 per cent rise in gross domestic product in the September quarter was less than the 0.3 per cent rise the market was expecting and suggested there was no need for the central bank to rush to raise interest rates.

The NZ dollar was US70.54c at 4pm from US70.55c at 8am and US69.92c at 5pm yesterday.

The failure to break support around US70c suggested investors should adopt a neutral stance on the currency, Westpac currency strategist Imre Speizer said.

"The US dollar fell across the board with a larger than expected fall in new home sales spurring a bout of pre-Christmas profit taking," he said.

New home sales unexpectedly fell 11.3 per cent and a downward revision to Michigan consumer sentiment for December (from 73.4 to 72.5) was another US dollar negative. Westpac said trading was thin even in the US dollar market.

The NZ dollar firmed to A79.95c at 4pm from A79.82c at 5pm yesterday, and at 0.4916 euro from 0.4908, and 64.52 yen from 64.12. The trade weighted index was at 64.65 from 64.32.

The Associated Press reported that the new data on home sales and consumer spending reinforced that the US economy's recovery will be bumpy and slow.

- NZPA