NZ dollar steady; offshore events to set tone

WELLINGTON, Aug 31 - The New Zealand dollar <NZD=> was steady on Monday in a quiet start to the week, with the tone likely to be set by external events and the performance of global stock markets.

* Kiwi trades around $0.6840, consolidating after it failed again to break above $0.6900 on Friday.

* Slightly weaker tone was set by softer U.S. stocks close on Friday after U.S. consumer confidence fell to its lowest level in four months, sowing doubt about a U.S. recovery.

* The yen trades modestly firmer after Japanese voters swept the opposition to a historic victory in an election on Sunday, ousting the ruling conservative party and handing the untested Democrats the job of breathing life into a struggling economy. [ID:nT352128]

* NZ dollar softer against the yen <NZDJPY=R> and lower against the Aussie <NZDAUD=R>, which has been underpinned by speculation that the Reserve Bank of Australia will raise rates by the end of the year. RBA's latest decision due on Tuesday with expectations of no change to rates, but a growing view that it may switch to a tightening bias.

* Reserve Bank of NZ governor Bollard says the local and global economies are recovering, but it will be the quality of recovery that matters, including a move away from previous debt-financed housing investment and domestic consumption. NZ dollar strength reflects weak U.S. dollar. See [ID:nWEL465111]

* NZ data calendar thin again with only National Bank of NZ monthly business survey at 0300 GMT Monday the only item of note. Fonterra's dairy auction and the prices achieved later in the week may also be a factor. However, offshore data includes U.S. jobs and auto sales, and there is also a meeting of the European Central Bank.

* Kiwi seen driven by broader market event, with resistance still seen at around $0.6900 where option barriers exist and support at around $0.6775.

* NZ bonds a touch softer with yields a tick higher, despite U.S. Treasuries gaining after the weak U.S. consumer data. ---------------(31 August 2009 13:00 / 0100 GMT)---------------

(Last prices as at 6pm NZ time the previous day) 90-DAY LIVE 2.78 (2.77) NOV-2011 4.050 (4.040) 90-DAY (SEP) 97.33 (97.32) APR-2013 4.920 (4.910) 90-DAY (DEC) 97.15 (97.13) DEC-2017 5.700 (5.690) 90-DAY (MAR) 96.76 (96.75) MAY-2021 6.110 (6.095) RBNZ MCI 104 (128) US 10YR BOND 3.455 (3.464) NZD TWI 63.42 (63.73) AU 10YR BOND 5.522 (5.470) NZD/USD 0.6849(0.6873) NZ/US 10YR SPD +225bp(+223bp) NZD/AUD 0.8111(0.8184) NZ/AU 10YR SPD +18bp (+22bp) NZD/EUR 0.4785(0.4786) NZ 2YR SWAP 4.115 (4.110) NZD/JPY 63.61 (64.40) NZ 5YR SWAP 5.380 (5.375) --------------------------------------------------------------- - (