Dollar slips over euro rescue package disappointment

The New Zealand dollar gave up some of its gains in another volatile session as the market began to harbour doubts about a $1.3 trillion European rescue package.

By 5pm, the kiwi was at US71.88c, down from US72.14c late yesterday afternoon.

The kiwi had climbed from around US70.70c early Saturday to near US72.95c before it began weakening. It had gained against the greenback and the yen as markets reacted to a 750 billion euro ($1.3t) emergency loan plan to prevent a European sovereign debt crisis from spreading.

While weaker against the US dollar, the kiwi rose to A80.04c from A79.95c yesterday afternoon, and was at 0.5643 euro from 0.5582.

The trade weighted index inched higher, to 68.28 from 68.20 late yesterday.

"It looks like disappointment with the eurozone package," said Murray Hindley, chief foreign exchange dealer at ANZ.

"Obviously we've seen euro lose ground through the Asian session, and ... even with the strong finish in the Dow certainly not reflected in the Asian or Australasian bourses and we've seen currencies struggle."

The euro had initially rallied against the US dollar after the emergency plan was announced but then gave up gains as enthusiasm for the bailout faded and investors focused on whether the plan would be effective.

"Certainly, the markets continue to be volatile," Mr Hindley said.

Of immediate interest was the Australian budget tonight, but there was little domestic data this week until retail sales figures on Friday.

- NZPA