NZ dollar continues downward trend

The New Zealand dollar rose then retreated today in a market where the biggest influence continues to be the fortunes of the euro.

The NZ dollar was at US66.57c at 5pm from US66.75c at the same time yesterday. It had fallen to a 10-month low on Tuesday night around US65.60c and rose as high as US67.20c this morning.

Imre Speizer, senior currency strategist at Westpac, said the NZ dollar rose in morning trading when equity markets rallied strongly then drifted lower. The moves both overnight and today were just following the euro.

"Local fundamentals are still counting for zip," he said.

In the long run fundamentals would become more of an influence but in the short term sentiment was driving the market.

The euro continues to trade near a four-year trough against the United States dollar and eight and a half year low against the yen as fears persist about Europe's debt woes.

Even Fonterra's announcement yesterday of a forecast milk payout for next season, that suggested a significant boost for the New Zealand economy, was unable to drive the kiwi up.

The NZ dollar fell to A80.82c by 5pm from A81.33c yesterday, and was little changed at 0.5416 euro from 0.5422 yesterday. The trade weighted index was 64.96 at 5pm from 65.15 yesterday.

- NZPA