NZ dollar falls as risk aversion rises

File photo / NZH

The New Zealand dollar fell to a two and a half week low today as the greenback rose and the Australian dollar fell.The United States dollar was boosted by data showing new US jobless claims hit a two and a half year low, while the Australian dollar was knocked after the Reserve Bank of Australia said rates were likely to stay on hold for some time.

The NZ dollar was at US76.01c at 5pm, down from US76.43c at 8am and US77.07c at 5pm yesterday. If fell to A76.04c from A76.14c at 8am and A76.42c at 5pm.

The NZ dollar also dropped to 0.5596 euro from 0.5622, as the European currency fell away against the greenback on worries over Europe's lack of progress in tackling its debt crisis.

ANZ bank said increased risk aversion and the weaker euro had been enough to see initial support levels for the NZ dollar tested and broken overnight, while

data on the New Zealand economy today continued to be mixed.

ASB said that a 1.8 per cent rise in food prices in January was higher than expected and was due to the higher costs of fruit and vegetables.

It said food prices would be a key factor to watch during 2011.

News that activity was muted in the residential property market in January, according to a Real Estate Institute of New Zealand report, reinforced the possibility of a double-dip recession as signalled by Finance Minister Bill English this week.

The comment by Mr English had knocked the NZ dollar lower earlier this week. Today it was Reserve Bank of Australia Governor Glenn Stevens who captured the attention of investors.

Mr Stevens told a parliamentary committee that market pricing for no rate hike until late in the year was reasonable.

"I feel that the current level is about right for the medium-term outlook we have," he said.

The Australian dollar fell below parity with the US dollar for the first time since February 1 in the wake of his comments.

The NZ dollar trade weighted index was down to 67.94 at 5pm from 68.46 yesterday.

- NZPA