NZ dollar slips on Greek uncertainty, weak US data

The New Zealand dollar fell against the greenback as further signs of weakness in the US economy and concern Greece won't enact reforms to win a bailout and avoid default sapped demand for growth-linked currencies.

Speculation grew that Greece is struggling to meet terms of its bailout package from the European Union and the International Monetary Fund after Prime Minister George Papandreou signalled that he would reshuffle his cabinet.

The perceived inability to make political headway on an austerity package has cast doubts on a second bailout, which is urgently needed if Greece is to avoid defaulting on its debt payments next month.

"Risk sensitive currencies underperformed against the US dollar as markets focused on the situation in Europe, in particular the Greek debt crisis," said Mike Burrowes, a market strategist at Bank of New Zealand. "It's clear investors are not liking the confusion, the lack of a clear plan of where to go to from here."

The kiwi dollar recently traded at 80.01 US cents, down from 80.28 cents yesterday, and fell to 69.61 on the trade-weighted index of major trading partners' currencies from 69.76.

It was little changed at 76.08 Australian cents from 76.10 cents previously, and dropped to 64.60 yen from 64.70 yen. It declined to 56.52 euro cents from 56.78 cents yesterday, and slipped to 49.63 pence from 49.72 pence previously.

Market concerns that the US recovery may be sputtering to a halt also gathered steam overnight, after the Philadelphia Federal Reserve Bank's business activity index, which measures factory activity in the mid-Atlantic region, dropped to -7.7, its lowest level since June 2009 and recorded it s first contraction in nine months.

The kiwi may trade in a range of 79.70 US cents, and 81 cents, Burrowes said.