NZ dollar falls against most currencies

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The New Zealand dollar fell on a trade-weighted basis in the wake of two major aftershocks in Christchurch yesterday, but remained near recent highs amid solid offshore demand.

The kiwi dollar fell 1 per cent against the basket of major currencies immediately after yesterday's quakes, before finding support near the 70.20 level on the trade-weighted index as demand for the currency kicked in. Investors' appetite for higher-yielding, or riskier, assets returned, with stocks on Wall Street gaining.

The Standard & Poor's 500 Index incraesed 0.1 per cent to 1,271.91, while Europe's Stoxx 600 rose 0.2 per cent to 268.71.

"Despite yesterday's corrections the kiwi remains overall supported," said Alex Sinton, a senior dealer at ANZ New Zealand.

"The overriding driver for the currency right now is a supply issue, and if there's plenty of demand we know which way price goes."

The kiwi dollar recently traded at 81.52 U.S. cents, little changed from 81.50 cents yesterday, and fell to 70.30 on the trade-weighted index of major trading partners' currencies from 70.40.

It fell to 76.80 Australian cents from 77.10 cents previously, and slipped to 65.35 yen from 65.44 yen. It declined to 56.56 euro cents from 56.73 cents yesterday, and fell to 49.80 pence from 50.08 pence previously.

Fears about Europe's sovereign debt came into focus after Standard & Poor's slashed Greece's debt rating to CCC, or eight notches into junk, and kept it on negative outlook. The Mediterranean nation now has the lowest credit rating in the world.

Traders will be watching for the release of Chinese data for May, with industrial production figures likely to be the main focus.

Previous numbers showed China's industrial value-added output rose 13.4 per cent in the year ending April, down from March's 14.8 per cent growth.

Chinese Consumer Price Index figures will also feature, with the market looking for signs the People's Bank of China may raise rates in the near term. In April, CPI inflation eased to 5.3 per cent from 5.4 per cent in the previous month.

ANZ's Sinton said signs of further softening in the world's second biggest economy would likely impact the Australian dollar, which would drag the kiwi lower as well.

The kiwi may trade between a range of 81.20 US cents and 81.85 cents, Sinton said.