NZ dollar falls as weak US data weighs on Wall St

The New Zealand dollar fell against the greenback, after weaker U.S employment and manufacturing figures weighed on equities and sapped investors' appetite for riskier, or higher yielding, assets.

Global equities fell sharply after a survey by ADP Employer Services showed US companies hired 38,000 workers in May, short of the 175,000 improvement the market was expecting according to a Bloomberg consensus forecast. Sentiment was also dented by weaker manufacturing data, with the US manufacturing sector showing a marked pull back in May.

On Wall Street, the Standard & Poor's 500 Index fell 2.3 per cent to 1314.57, its lower level in almost six weeks. Europe's Stoxx 600 fell 1 per cent to 278.38. The pull-back in risk appetites saw demand for growth-linked currencies such as the New Zealand and Australian dollar fall.

"The most consistent driver was the softer US figures, including the employed figures and the ISM data," said Nick Bennenbroek, head of FX strategy at Wells Fargo in New York.

"It was fairly significant adjustment and the market has remained a little unsettled, so I think the bias is going to continue to be down for non-US currencies."

The currency drew some support stronger local produced commodities prices. The average price of milk powder rose 4.5 per cent to US$4,306 per metric tonne in Fonterra's latest online auction, reaching the highest level since early March, led by gains in skim milk powder.

That comes after the ANZ Commodity Price Index showed New Zealand commodity prices edged up to a new record in May, although it was the smallest gain of nine consecutive increases, following a 1.6 per cent gain in April.

The kiwi dollar recently traded at 81.77 US cents, down from 82.27 cents yesterday, and fell to 70.56 on the trade-weighted index of major trading partners' currencies from 70.83 yesterday. It rose to 76.76 Australian cents from 76.64 cents previously, and fell to 66.12 yen from 66.95 yen.

It declined to 56.89 euro cents from 57.06 cents yesterday, rose was little changed at 49.98 pence from 49.91 pence previously.

The kiwi dollar may trade between a range of 81 US cents and 82 cents, Bennenbroek said, with the bias towards the lower end of the range.