Mon, 12 Oct 2009 10:01a.m.
The New Zealand dollar weakened overnight Friday as investors continued to take note of comments by United States Federal Reserve chairman Ben Bernanke.
Mr Bernanke's comments had already taken some of the steam out of the NZ dollar during the day on Friday. Early that day the kiwi briefly topped US74.50c for the first time in more than 14 months.
By 5pm on Friday the NZ dollar was down to US73.94c, and by 8am today it was at US73.42c.
ANZ bank said the cavalry, in the form of Mr Bernanke, had come to the US dollar's rescue on Friday.
On the face of it, his speech looked fairly dull, but the market reaction was aggressive and, perhaps, unexpected and overdone.
Mr Bernanke did not say anything new. He reiterated the line that accommodative policies would likely be warranted for an extended period. And he stated the obvious, that when the economy recovered, monetary policy would need to tighten, ANZ said.
Yet the markets latched on to Mr Bernanke's speech as a sign that policy could be tightened sooner than expected. The US dollar strengthened after looking so vulnerable during the week when key support levels were broken.
The NZ dollar moved lower, though the Australian dollar managed to hold its ground much better, sending the kiwi lower against the aussie.
By 8am today the NZ dollar was down to A81.22c from A81.73c at 5pm on Friday.
"Finally logic wins on this cross with the reality that higher Australian interest rates are coming without a commensurate move by the RBNZ (Reserve Bank of New Zealand)," ANZ said.
The NZ dollar was also down to 0.4988 euro at 8am today from 0.5021 at 5pm on Friday, and eased to 65.85 yen from 65.95. The trade weighted index was 66.28 at 8am from 66.65 at Friday's local close.
NZPA