Kiwi dollar struggles against strong US

The New Zealand dollar lost a bit of puff against its US counterpart overnight as building statistics in America gave the greenback an unexpected tailwind.

The kiwi was worth US70.45c at 5pm yesterday. It traded as high as US70.79c overnight before slipping to US70.38c at 8am today.

BNZ market strategist Mike Jones said a broad strengthening in the US dollar overnight "knocked some of the wind out of NZD/USD's sails".

Upbeat US data reinforced the idea the US economy was gradually strengthening, in contrast to the recent stalling in the Eurozone economies - sending the euro plunging over 1.5 cents to nearly 1.3600 as investor focus returned to the region's fiscal woes.

In contrast, growth-sensitive currencies like New Zealand and Australia were relatively insulated from the firming US dollar last night, he said.

Ongoing interest to sell the euro against the currencies also helped prop up the antipodean currencies and the kiwi/euro surged a bit over 1 per cent last night to flirt with 23 month highs around 0.5180, and this ensured losses in NZD/USD were limited to around US70.30c, Mr Jones said.

Against the Australian dollar the kiwi was worth A78.30c at 8am today, up from A78.23c yesterday.

The kiwi was also up to 0.5173 euro from 0.5116 yesterday, against the Japanese yen it was up to 64.07 from 63.32, and against the British pound it was worth 44.89p, up from 44.66p yesterday.

The trade weighted index was at 65.18 from 64.93 yesterday.

The US dollar rose to a two-week high against the yen and rallied against the euro overnight, lifted by the stronger-than-expected US housing and industrial output data, and bearish investor sentiment on the euro.

In New York's early afternoon trading, the dollar was 0.8 per cent higher at 90.82 yen after touching a session high of 91.15 yen in the aftermath of the data.

The euro fell to as low as $1.3598 from as high as $1.3779 on Tuesday. It last traded down 1.1 per cent at $1.3608.

The euro fell even after European finance ministers on Tuesday gave Greece a one-month reprieve until March 16 to show its deficit reduction plan was being rolled out effectively. They set the same deadline for themselves to decide what should happen next.

The euro has fallen almost 5 per cent against the dollar since the start of the year on concerns about Greece's fiscal health and that of other peripheral euro zone countries. Currency speculators raised net euro short positions to a record high last week.

- NZPA