NZ dollar slips against greenback

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The New Zealand dollar slipped further against the greenback overnight as risk-off trading saw commodity prices fall for a third day, denting demand for the local currency. That was ahead of today's labour force survey which is tipped to show a flat unemployment rate.

Investors' appetite for higher-yielding, or riskier, assets was dented by weaker US data as ADP Employer Services numbers showed private payrolls increased by 179,000 in April, short of the 198,000 anticipated and well down on the previous months reading of 207,000.

The shift to risk-off trading saw commodity prices extend their decline with the Thompson Reuters Jefferies CRB Index, a measure of 19 commodities, falling 1.8 per cent to 358.63, its lowest level in almost a month.

Today's unemployment numbers are expected to show that New Zealand's jobless rate fell to 6.7 per cent in the first quarter, according to a Reuters poll. That's down on the 6.8 per cent reading at the end of last year.

"We've reached stage, with the economic data mixed and disappointing of late, where investors have started to question the levels the commodities have gotten to," said Khoon Goh, head of market economics & strategy at ANZ New Zealand.

"Today's unemployment release is going to be quite critical in terms determining the kiwi's support levels, but the overall environment will be ultimately be more influential."

The kiwi recently traded at 79.04 US cents, down from 79.34 cents yesterday, and fell to 67.38 on the trade-weighted index of major trading partners' currencies from 67.53.

It rose to 73.50 Australian cents from 73.06 cents yesterday, and fell to 63.71 yen from 64.25 yen. It declined to 53.27 euro cents from 53.43 cents, and fell to 47.89 pence from 48.10 pence previously.

The Australian dollar fell more than a cent against the U.S. currency, and was recently trading at US$1.075, down from US$1.0854 yesterday, as signs of further policy tightening in China exerted pressure on the currency.

The Peoples Bank of China said that the Chinese economy is facing pressure from imported inflation, which may prompt it to appreciate the yuan at a faster pace or hike rates further.

The kiwi dollar may trade between 78.50 US cents and 79.17 cents, Goh said, with traders watching how Asian markets open for signs of spreading risk aversion.