NZD/USD: Holding Firm, But Offers Seen at 0.6620/25

The Kiwi is holding firm this morning at 0.6600, bolstered by AUD gains today and reports overnight of Asian buying of Kiwi and AUD bonds due to the attractive high yields with the NZD yield spread over US bonds in the ten-year part of the curve near the highest levels since February. Bids are seen as close as 0.6600 this morning where Kiwi is holding with further demand near 0.6570/75. Offers are around 0.6620/25 and some punters are even tipping that this level could hold until the release of August retail sales on Friday. However, the underlying bid in Kiwi is being fuelled by reports that exporters are short cover on the unexpected recovery in the currency following the sell-off earlier in the year. On the negative side, the rise in the currency is seen hurting exporter payouts now with Fonterra, the dairy cooperative, stating that the currency level could hurt payouts and the NZD is overvalued.