The New Zealand dollar weakened amid broad US dollar strength as improvements in manufacturing indicators point to a revival in economic growth.
The kiwi slipped to 85.61 US cents at 8am in Wellington from 85.82 cents at 5pm yesterday. The trade-weighted index edged lower to 79.90 from 79.98 yesterday.
Better-than-expected manufacturing indicators out of the US and China, the world's two largest economies, bolstered optimism about global economic growth, pushing up Wall Street and the US dollar. In China, a preliminary purchasing managers' index from HSBC and Markit climbed to 49.7 in May, the highest level in five months, while the Markit US manufacturing PMI also beat expectations at 56.2, showing output rising at the fastest pace for three years.
"Broadly speaking we saw the US dollar strengthen overnight, underpinned by global economic factors. There are less fears around global growth," said Stuart Ive, senior advisor at OMF. "The US dollar is gaining a bit of strength and hence why we see the kiwi a fraction lower from yesterday."
With a lack of key data scheduled for release today, the kiwi will probably trade in a tight range of 85.45 US cents to 85.80 cents, Ive said.
