The New Zealand dollar held above 75 US cents after Fitch Ratings lowered France's rating outlook to negative and put six other European nations on review, citing Europe's failure to find a "comprehensive solution" to the debt crisis.
The kiwi dollar was little changed at 76.10 US cents just after 8am, from 76.02 cents in late New York trading on Friday. The trade weighted index increased to 68.32 from 68.21.
Fitch affirmed France's AAA rating and placed Spain, Italy, Belgium, Slovenia, Ireland and Cyprus on a "Rating Watch Negative" review, which it expects to complete by the end of January. Separately, Belgium's credit rating was cut two levels to Aa3 by Moody's Investors Service. The ratings action suggests financial markets will again be dominated by concern Europe's woes are undermining global growth.
"The kiwi will be lead by the euro again this week," said Tim Kelleher, head of foreign exchange at ASB Institutional. "The markets will be pretty trim in the lead up to Christmas, so any news is going to make the markets move further than we expect."
The Guardian newspaper reported that Standard & Poor's is threatening to downgrade France in coming days after it placed the ratings of 15 euro nations on review, including the region's six AAA rated countries last week.
