NZ dollar at 2 week low ahead of cenbank rate review

WELLINGTON, Oct 29 - The New Zealand dollar sat near two-and-a-half week lows on Thursday as investors turned more risk averse ahead of a central bank policy review expected to pave the way to eventual rate rises.

* Kiwi <NZD=D4> resumes locally around $0.7280/90 as investors turned away from risky assets amid weaker stocks and renewed doubts about the global economic recovery.

* The safety of the U.S. dollar and yen sought as U.S. data shows an unexpected fall in new home sales, which offset solid durable goods report. See [USD/]

* NZ dollar peaked at $0.7461 in the offshore session, but was also dragged lower by a weaker Aussie dollar <AUD=>, which fell after inflation data was not seen as so strong as to justify aggressive central bank rate rises. Markets look for a 25 basis point rate rise next week.

* Trade weighted NZ dollar <=NZD> down more than 1.2 percent as kiwi falls against most other currencies, most notably the yen <NZDJPY=R>.

* RBNZ rate review due at 9 a.m. (2100 GMT), with no change seen to 2.5 percent cash rate. RBNZ is also expected to drop reference to another possible rate cut, and may even dilute its pledge to keep rates at current level until latter part of 2010. See [ID:nWEL505681]

* NZ trade data for September due at 10.45 (2145 GMT), with expectations for annual deficit to narrow to NZ$1.77 billion. <ECONNZ> [NZ/POLL]

* National Bank of NZ's business confidence survey showed signs of levelling out, but near decade highs, after its strong recovery this year. Survey points to economy gaining momentum, which will eventually lead to central bank raising rates. See [ID:nSYD483785]

* Norway's central bank raises its key rate as expected and signals further rises, but says any appreciable currency rise may affect the speed and size of tightening. See [ID:nLS330178]

* NZ dollar seen supported at $0.7260 with initial resistance around $0.7400.

* NZ bonds open mixed with short dated softer, mid-dated bonds a touch firmer. U.S. Treasuries gained as weak new home sales data spurs safe haven bid for debt. -------------(29 October 2009 08:30 / 1930 GMT)----------------

(Last prices as at 6pm NZ time the previous day) 90-DAY LIVE 2.80 (2.77) NOV-2011 4.510 (4.465) 90-DAY (DEC) 97.08 (97.1) APR-2013 5.230 (5.240) 90-DAY (MAR) 96.67 (96.64) DEC-2017 5.800 (5.790) 90-DAY (JUN) 95.78 (95.74) MAY-2021 6.075 (6.060) RBNZ MCI 287 (400) US 10YR BOND 3.411 (3.395) NZD TWI 65.76 (67.30) AU 10YR BOND 5.645 (5.720) NZD/USD 0.7278(0.7536) NZ/US 10YR SPD +239bp(+240bp) NZD/AUD 0.8101(0.8143) NZ/AU 10YR SPD +16bp (+7bp) NZD/EUR 0.4946(0.5023) NZ 2YR SWAP 4.680 (4.690) NZD/JPY 66.03 (68.68) NZ 5YR SWAP 5.710 (5.650) --------------------------------------------------------------- - (