The New Zealand dollar hit a fresh five-year low as traders firm up expectations for more interest rate cuts following a weaker-than-expected gross domestic product report last week, and as upbeat US economic data strengthens the case for US rate hikes in September.
The kiwi touched 68.57 US cents, its lowest level since July 2010, and was trading at 68.63 cents at 8am in Wellington, from 69.14 cents at 5pm yesterday. The trade-weighted index slipped to 71.52 from 71.79 yesterday.
The US dollar index, which measure the greenback against a basket of currencies, advanced after a report showed US sales of existing houses rose to their highest level since 2009, bolstering optimism about a recovery in the world's largest economy.
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Meantime the kiwi is out of favour, after first-quarter GDP missed expectations last week, prompting traders to increase their bets for future interest rate cuts. Reserve Bank governor Graeme Wheeler cut the benchmark interest rate by a quarter-point this month to 3.25 percent and traders are pricing in a 74 percent chance he will reduce the rate further next month, according to the overnight index swap curve.