The New Zealand dollar has slipped back below US70 cents after it failed to break through a key resistance level, prompting traders to bank profits ahead of the Reserve Bank interest rate review next week.

The kiwi dropped to US69.72c at 0800 on Thursday in Wellington, from US70.08c at 1700 on Wednesday. The trade-weighted index declined to 73.20 from 73.48.

The New Zealand dollar declined even as commodity prices gained as traders bet its appreciation through US70c may have gone too far, and sold the currency to take profits.

The kiwi touched a 10-month high of US70.54c early Wednesday morning, but failed to break higher ahead of the Reserve Bank’s review of interest rates next week where traders are betting on a 55 per cent chance that interest rates will remain unchanged, and a 45 per cent chance of a cut.

“We touched an upside support resistance level yesterday and failed to gain any momentum to push on through it, that lies around the 70.50 US cent area, so that kind of stopped the momentum higher,” said OMF’s Stuart Ive.

“We are still within striking distance but with the RBNZ next week, the focus will certainly be switching towards that so we can expect the kiwi to perhaps come back as people bank profits from the recent rise ahead of that meeting.”

Also aiding the kiwi’s slide was an appreciation in the US dollar and news reports that Finance Minister Bill English plans to step up his oversight of the central bank, prompting speculation he favours more interest rate cuts.

In New Zealand on Thursday, migration and tourism data for March will be released at 1045 and the ANZ-Roy Morgan consumer confidence report is published at 1300.

In the morning, the New Zealand dollar fell to 89.46 Australian cents from A90.01c on Wednesday, declined to 48.64 British pence from 48.78p and dropped to 4.5091 yuan from 4.5296 yuan.

The kiwi advanced to 61.73 euro cents from 61.68c and gained to 76.52 yen from 76.36 yen.

BusinessDesk