NZ dollar falls below 70 US cents, further rate cuts seen

File photo / NZ Herald

The New Zealand dollar ended last week below the key 70 US cent level and touched a five-year low over the weekend after the Reserve Bank cut interest rates and traders priced in further reductions in coming months.

The kiwi was trading at 69.93 US cents at 8am in Wellington, from 69.81 cents at the New York close and 70.04 cents at 5pm on Friday.

It touched 69.41 US cents ahead of the New York close, the lowest level since July 2010.

The New Zealand dollar tumbled last week after Reserve Bank governor Graeme Wheeler cut the benchmark interest rate by 25 basis points to 3.25 percent, surprising some in the market who had expected rates to remain on hold.

Economists are split on the likely timing of the next cut, with six expecting July, eight saying September and one betting on December.

"The NZD/USD has drifted lower over the weekend, breaking through the key psychological support level of 0.7000 and reaching a five-year low," Bancorp Treasury Services said in a note, adding the kiwi had little support down to the 68.50 US cent level.

Economic news this week will be focused on the US, with the Federal Reserve scheduled to review interest rates, which means the kiwi/US rate could be "in for a rough ride", Bancorp said.

Today, the BNZ-BusinessNZ Performance of Services Index is scheduled for release.

The New Zealand dollar fell to 90.36 Australian cents from 90.51 cents on Friday.

Reserve Bank of Australia assistant governor (economic) Christopher Kent is scheduled to speak to the Australian National University in Canberra today.

The kiwi slipped to 62.28 euro cents from 62.35 cents on Friday as faltering Greek negotiations with its creditors continue ahead of debt payments due at the end of this month.

The local currency weakened to 44.94 British pence from 45.16 pence on Friday, and slipped to 86.19 yen from 86.45 yen. The trade-weighted index fell to 73.04 from 73.16 on Friday.