The New Zealand dollar touched an 11-month high after the Reserve Bank raised interest rates and signalled more hikes ahead, before the currency retreated on concern about escalating tensions in the Ukraine and slower than expected growth in China.
The kiwi hit 86.06 US cents early this morning, its highest level since April last year, and was trading lower at 85.23 cents at 8am in Wellington from 85.61 cents at 5pm yesterday. The trade-weighted index, which measures the kiwi against the currencies of New Zealand's main trading partners, touched a new post-float high of 80.29, and was trading at 79.71 at 8am from 80.04 yesterday.
The New Zealand dollar eased from its highs as investors favoured safe-haven assets on concern about escalating tensions in the Ukraine as Russia amassed troops near the border and US secretary of state John Kerry signalled western countries may respond should a referendum in the Crimea region go ahead on Sunday. Weaker-than-expected Chinese industrial output and retail sales data also weighed.
"A generally risk off session overnight, with concerns over the Chinese outlook and tensions in the Ukraine weighing on sentiment," ANZ Bank senior economist Mark Smith and senior FX strategist Sam Tuck said in a note. "Further NZD gains will be difficult."
The kiwi is likely to trade between 85 US cents and 86 US cents today, according to ANZ.