WELLINGTON: The New Zealand Dollar climbed more than half a cent after the Reserve Bank of New Zealand (RBNZ) kept rates on hold at 2.50 percent but was a touch more hawkish on the outlook for hikes, while the Australian Dollar slipped on poor risk appetite.
The New Zealand dollar was up at $0.8209, from about $0.8150 before the RBNZ statement, recovering all its offshore losses.
The kiwi is seen in a broad range, with support from $0.8115 with resistance at $0.8232.
The RBNZ said rates were on hold for now, but hikes would be needed over the next two years to contain inflation. Analysts' initial view is that the bank is still likely to remain on hold through 2011.
The slightly more hawkish tone contrasted with the Reserve Bank of Australia's (RBA) policy statement earlier in the week which sounded more guarded on the need for rate rises.
The contrast saw the Aussie slip to NZ$1.2943, from $1.3022 before the RBNZ news, and threaten major support around $1.2905.
RBNZ Governor Bollard did try and restrain the kiwi, saying it was overvalued and he expected it to gradually fall.
The Australian Dollar was at $1.0630, more than a third of a cent lower than Wednesday. The Aussie ranged between a five-day low of $1.0590 and a high of $1.0656 in offshore trade.
On its dip, the Aussie encountered strong support from the June 3 low of $1.0580, while resistance starts at $1.0671 ahead of $1.0692.
Market jittery ahead of key Australian jobs is numbered for May at 0130 GMT. Analysts forecast a rebound of 25,000 in employment after April's surprise 22,100 drop. Anything softer would be taken as lessening the chance of a hike anytime soon.
Growth sensitive currencies struggled in offshore trade while the safe haven greenback and yen gained, while the euro was weighed down by persistent concerns over whether Greece would be able to satisfy conditions for another bailout package.
Stock markets in Europe and the U.S. sagged, as concerns about the economic outlook lingered in the wake of bearish comments by Fed Chairman Ben Bernanke and weaker-than-expected German export and manufacturing data.
The market is becoming increasingly nervous as the end of the Fed's bond buyback programme looms at the end of June, with the potential for Wall Street to slump further.
Commodity prices rose after crude oil prices climbed after OPEC failed to reach an agreement to lift output, raising fears of supply shortages.
NZ debt prices edge higher, with yields slipping slightly, while bank bills were as much as 6 basis points lower after the RBNZ.
Australian bond futures also crawled upward, with the three-year contract rose 0.02 points to 95.130 while the ten-year contract gained 0.035 points to 94.785.
Copyright Reuters, 2011
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