NZ dollar falls as global growth fears rise

Photo / Dean Purcell

The New Zealand dollar fell against the greenback as a spate of weaker US economic data and resurgent European debt concerns fueled investors' fears that the global economic recovery may be stalling.

On Friday, US non-farm payroll data continued to cast a shadow of the pace of economic recovery in the U.S., with the world's biggest economy adding 54,000 job in May, short of the 170,000 expected by the market and down from 232,000 in the previous month.

Sentiment was further dented as European debt concerns flared after German officials called for an independent report on Greece before deciding if it will provide more rescue funds in a second bailout.

The decline in risk appetites saw commodity and equity prices fall overnight. On Wall Street, the Standard & Poor's 500 Index closed 1.1 per cent lower at 1286.17, while Europe's Stoxx 600 shed 0.6 per cent to close at 271.16.

Investors are now awaiting the Reserve Bank's Monetary Policy Statement on Thursday, which is expected to see the official cash rate unchanged at 2.5 per cent though with some comment on the kiwi dollar being too high.

"Economic data particularly in the US has disappointed and markets are starting to worry about a slowdown in global growth," said Khoon Goh, head of market economics and strategy at ANZ New Zealand.

"We've got the Reserve Bank meeting on Thursday, but outside of that the kiwi will just move with the ebbs and flows of the major global currencies."

The kiwi dollar recently traded at 81.27 US cents, down from 81.66 cents yesterday, and fell to 69.71 on the trade-weighted index of major trading partners' currencies from 69.87. It rose to 75.95 Australian cents from 75.87 cents previously, and fell to 65.21 yen from 65.46 yen.

It was little changed at 55.85 euro cents from 55.81 cents yesterday, rose to 49.81 pence from 49.69 pence previously.

The kiwi may trade between a range of 81.20 US cents and 82 cents, Goh said.