The kiwi was little changed at 84.15 US cents at 8am in Wellington from 84.13 cents at 5pm yesterday.
The kiwi was little changed at 84.15 US cents at 8am in Wellington from 84.13 cents at 5pm yesterday.
The New Zealand dollar was the worst-performing major currency overnight on speculation lower dairy commodity prices will weigh on economic growth.
The kiwi fell as low 85.45 US cents after rising as high as 87 cents earlier this week. The local currency was at 85.58 cents at 8am in Wellingtonfrom 86.02 cents at 5pm yesterday. The trade-weighted index fell to 80 from 80.37 yesterday.
Investors reduced their New Zealand dollar holdings after dairy product prices had the biggest drop in almost 20 months at yesterday's Fonterra Cooperative Group GlobalDairyTrade auction, with whole milk powder falling to its lowest level in more than a year. That marked the fourth straight decline in auction prices and raised concerns about the outlook for New Zealand's 40-year high terms of trade, which are seen as a factor underpinning accelerating economic growth this year.
"Globally the market is focusing on dairy trade," said Sam Tuck, senior foreign exchange strategist at ANZ Bank New Zealand. "It is a clear signal to not only New Zealanders but also the globe that a 40-year high peak in terms of trade can't be considered a one-way bet.
"It was a catalyst for a correction back to where we have been recently, rather than a complete game changer," Tuck said. "The kiwi had got too high, within a cent and a half of its post-float high."
ANZ expects the New Zealand dollar to decline to 83 US cents by the end of the second quarter as the US economy improves. Traders will be looking to tonight's ISM non-manufacturing survey and tomorrow's payroll report to gauge how the world's largest economy is tracking, Tuck said.
"Our central expectation is for continued pressure on the New Zealand dollar from here," Tuck said.
The kiwi will likely trade between 85 US cents and 86.10 cents today, ANZ said.
The New Zealand dollar dropped to 92.55 Australian cents from 93.06 cents yesterday. Today, Reserve Bank of Australia governor Glenn Stevens is scheduled to speak at a business lunch to the American Chamber of Commerce in Australia and Australia also has data on retail sales and international trade.
The local currency slipped to 62.18 euro cents from 62.31 cents yesterday ahead of the European Central Bank meeting today.
The kiwi fell to 51.48 British pence from 51.73 pence yesterday and weakened to 88.81 yen from 89.30 yen.
