NZ dollar slips below A76c

Photo / Dean Purcell

The New Zealand dollar dropped below A76c against the Australian dollar for the first time in nearly six months, as Chinese demand for Australian commodities continues to look strong.

From A76.33c at 5pm yesterday the kiwi fell as low as A75.86 early today, according to Reuters data, before edging back up to A76.12c at 8am.

The Australian currency hit its highest level against the US dollar in more than two years, touching US97.30c.

That was the peak since the aussie traded at US98.50c in July 2008 which was its highest level since being floated in 1983.

Also buoying the Australian dollar are expectations the Reserve Bank of Australia will lift rates next Tuesday, widening interest rate differentials between Australia and the rest of the world.

The continuing rise of the aussie played out against a weak US dollar, with the greenback hitting a fresh five-month low against the euro, as traders brace for more weakness amid growing prospects for further US monetary easing.

The NZ dollar did push up to a week high around US74.05c overnight but was unable to hold on to the gain falling away to US73.90c by 8am, almost no different to its 5pm level.

ANZ bank said the brief overnight move above US74c was unsustainable as several key support levels on cross rates gave way.

Support from offshore moves had not been enough to drive the NZ dollar to new heights, and for now the kiwi should continue to lag behind the moves of others as the focus of markets was elsewhere, ANZ said.

The NZ dollar fell to a four-month low near 0.5400 euros, down from 0.5436 at 5pm. By 8am the kiwi had edged back up to 0.5417 euros.

The euro is expected to continue rising against the US dollar after becoming resilient to economic and banking problems facing some countries on the periphery of the euro zone.

Also helping the euro was a report showing euro zone economic sentiment unexpectedly rose in September.

The kiwi was also buying 61.78 yen at 8am, little changed from the 5pm level, while the trade weighted index fell to 66.42 at 8am from 66.58 at 5pm.

- NZPA