Dollar bobbling around US70c level at local open

The New Zealand dollar was bobbling around the US70c mark at 8am today, having dropped to about US69.65c a few hours earlier, its lowest point after tumbling yesterday on the Reserve Bank's no change scenario for interest rates.

The kiwi was little changed from 5pm yesterday against the European and Australian currencies, buying 0.5124 euro and A76.59c at the local open, but did rise to 63.47 yen from 63 yen. The trade weighted index lifted to 64.69 at 8am from 64.58 at 5pm.

BNZ strategist Mike Jones said yesterday's monetary policy statement from the Reserve Bank was a tad more dovish than markets had expected.

The Reserve Bank had maintained its expectation to begin removing policy stimulus around the middle of 2010, but markets were more interested in the Reserve Bank's assertion that higher bank funding costs would reduce the work monetary policy might otherwise need to do.

Official cash rate tightening expectations were trimmed back accordingly, knocking some of the wind out of the NZ dollar against the greenback, Mr Jones said.

The US dollar barely budged against the euro, with trading volatile after a smaller-than-expected US trade deficit failed to give investors clear direction.

The US trade deficit narrowed unexpectedly in January as oil imports fell to their lowest since February 1999, a government report showed.

A separate government report showed the number of US workers filing new applications for unemployment insurance was slightly higher than expected last week, hinting at a slow labour market recovery.