NZ dollar gains against greenback hit by poor US data

Photo / Dean Purcell

After dipping below US68c for the first time in three weeks yesterday, the New Zealand dollar made up some lost ground overnight against a greenback weakened by data that heightened worries the United States economic recovery is stalling.

Around 8am today the kiwi was back up to US69.02c having climbed for the previous 12 hours. Before that the NZ dollar had been falling from a peak above US71.50c early on Monday as fears mounted about the health of the global economy.

Overnight, the US dollar fell to a seven-month low against the yen and tumbled versus the euro after reports showed a surprise rise in US weekly jobless claims, along with a record fall in pending home sales and slower-than-forecast manufacturing growth.

Analysts saw the market shifting focus from bad news out of Europe to risks of a much more sluggish US recovery reflected in a string of data over the past few weeks.

The inverse relationship between the US dollar and equities was also showing signs of breaking down as both Wall Street and the greenback fell.

The safe-haven yen also drew support after Chinese manufacturing data showed slower growth in June, heightening concerns over the global economy.

The NZ dollar weakened to 0.5514 euro at 8am today from 0.5575 euro at 5pm yesterday, but strengthened to 60.46 yen from 60.10.

Adding to gains in the euro was news European banks borrowed less money than expected from a European Central Bank tender, cooling concerns over euro zone banks' funding issues.

The single currency was also supported by Madrid's ability to sell five-year bonds following Moody's decision to put Spain's sovereign rating on review for a possible downgrade

Against the Australian dollar, the kiwi rose to A81.82c at the local open from A81.47c at 5pm, while the trade weighted index rose to 66.11 at 8am from 66.00 at yesterday's local close.

- NZPA