NZ dollar falls to nine-month low

The New Zealand dollar may trade in a range of 85 US cents and 86 cents today. Photo / File

The New Zealand dollar fell to a nine-month low as investors concerned about global growth moved to the relative safety of US Treasuries.

The kiwi dropped to as low as 79.25 US cents early this morning and recently traded at 79.48 cents, down from 80.46 cents at 5pm yesterday. The trade-weighted index slid to 74.64 from 75.45.

Investors sold equities and bought US Treasuries after some US reports raised concerns about the pace of the recovery in the world's largest economy. A report from the ADP Research Institute said US companies added fewer workers in May than expected and the Federal Reserve said in its Beige Book business survey that the economy expanded at a "modest to moderate" pace.

"People are a little bit concerned about the strength of the US economy, there is generalised risk aversion," said Michael Johnston, a senior trader at HiFX. "People are getting a bit nervous out there and the kiwi is coming off as a consequence. We still think we can go further."

HiFX expects the kiwi to drop as low as 75 US cents this year, possibly in the next two months, he said.

"The kiwi is being buffeted by offshore events," Johnston said.

The Dow Jones Industrial Average fell 1.4 per cent while 10-year Treasuries rose, pushing the yield down about 6 basis points to 2.09 per cent. Traders are now looking ahead to US non-farm payrolls for May, due on Friday for further evidence of the pace of the labour market.

The New Zealand dollar was little changed at 83.42 Australian cents, from 83.41 cents at 5pm yesterday. The kiwi slipped to 78.91 yen from 80.21 yen and dropped to 60.77 euro cents from 61.46 cents. The local currency slipped to 51.66 British pence from 52.50 pence yesterday.