The New Zealand dollar weakened after positive US data boosted confidence about a revival in the world's largest economy, reinforcing expectations the Federal Reserve will continue to pull back its stimulus this year.
The kiwi fell to 85.59 US cents at 8am in Wellington from 85.65 cents at 5pm yesterday and 86.17 cents at 5pm on Thursday. New Zealand markets were closed on Friday and Monday for the Easter public holiday although US markets were open yesterday. The trade-weighted index slipped to 79.66 from 79.98 on Thursday.
The US dollar index, which measures the greenback against a basket of currencies, advanced over the Easter period and early this morning touched a two-week high as leading US economic indicators backed up speculation the Fed will continue to remove stimulus this year. Traders were buoyed by better-than-expected US jobless claims and the Philadelphia Fed manufacturing index which jumped to a seven-month high in April.
"Markets took these outturns as further signs that the US economy is pulling itself out of the weather-related doldrums," Bank of New Zealand currency strategist Raiko Shareef said in a note.
The US dollar also found support after Russia, the US, the EU and Ukraine agreed to disarm all armed groups, an amnesty for most of those recently detailed and the vacating of occupied streets, Shareef said. Even so, both sides are already accusing the other of violating the terms of the agreement, he said.
