NZ dollar drifts lower

File photo / NZ Herald

The New Zealand dollar was weak today as investors ditched all manner of risky assets, including higher-yielding currencies and stocks, but it finished off session lows.

By 5pm today the NZ dollar was buying US71.27c, down from US72c at 5pm yesterday but up from the session low around US70.97c, which was a three-week low.

The NZ dollar had the steam knocked out of it in the last couple of days and was now drifting lower, said Mike Jones, currency strategist at BNZ.

"Some of today's drift lower reflects what has happened to the aussie dollar. Kiwi has been dragged lower after disappointing Australian employment numbers," he said.

The US dollar had been under steady pressure in the past six weeks as weak US economic reports fed fears that the US economy was slowing while data from the euro zone and elsewhere appeared to be holding firm.

But markets have since grown anxious about the state of the broader world economy, with some investors afraid the sluggish US economy will slow growth beyond American shores as well.

"We are seeing a much more cautious attitude to risk at the moment," Mr Jones said.

He said the NZ dollar currently had support at US70.60c and this should hold in the short term.

But direction would be dictated by how much follow through to the recent weakness there was in overnight trading.

ANZ bank said that despite the higher risk aversion levels globally, the fall of the NZ dollar was relatively subdued in comparison to that of the euro.

Yield demand had cushioned the fall of the NZ dollar in the face of poor US equity performance, ANZ said.

The NZ dollar was up to 0.5536 euro at 5pm from 0.5489 yesterday, but fell to 60.78 yen from 61.36 yen. It was at A79.57c at 5pm from A79.28c yesterday.

The trade weighted index was 66.51 at 5pm from 66.58 yesterday.

- NZPA