WELLINGTON (Dow Jones)--The New Zealand dollar was trading higher late Thursday as dovish comments from the Reserve Bank of New Zealand Governor Alan Bollard failed to completely eradicate overnight gains. ANZ foreign exchange manager Murray Hindley said the market had sold off "a little bit" after the governor made comments about New Zealand inflation around 2 p.m. local time due to the market taking them as dovish. Bollard said given the country's fragile economic recovery, it is important that firms base their pricing decisions on low underlying inflation rather than an upcoming temporary spike largely related to an increase in the Goods and Services Tax on Oct. 1. Hindley added the market had seen a slight bounce after the ANZ-Roy Morgan Consumer Confidence survey posted a slight rise in August. ANZ Head of Market Economics and Strategy Khoon Goh said the survey's slight increase bucked the declines over the previous two months. "The increase is marginal and well within the usual monthly volatility," he added. Hindley said there was little data due out overnight and the currency markets would take their lead from the moves in the equity markets. BNZ currency strategist Mike Jones said the New Zealand dollar had found support overnight Wednesday due to a surge in the New Zealand dollar against the Australian dollar, which provided the kiwi with a tail wind against the U.S. dollar. "Uncertainty about the upcoming Australian election has begun to weigh on the Australian dollar, particularly in regards to possible changes to the Australian resources tax and the introduction of austerity measures," he said. Interest rate swaps fell sharply but while New Zealand government bonds moved higher they underperformed, said a local bond trader. "I think people have moved out of the swaps spread trade and they've ended up having to sell bonds and receive swaps," he said, adding the market had also seen a sizeable government bond tender earlier Thursday. The Debt Management Office sold NZ$100 million of April 2015 at a weighted yield of 4.48%, NZ$100 million of Dec. 2017 at a weighted yield of 4.91%, and NZ$100 million of May 2021 at 5.21%. -By Lucy Craymer, Dow Jones Newswires; 64-4-471-5990; lucy.craymer@dowjones.com

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