NZ dollar heads for mild correction

File photo / NZH

The New Zealand dollar continued slipping and sliding from holiday highs today, coming back to its December levels, and before that, October levels.

Having reached US78 cents at New Year, it was falling though US75.68c at 5pm today, and indicating that investors have collected the profits from positions built up since mid-December. It failed to take support from Fonterra's Wednesday online dairy auction, where prices lifted over 7 per cent, and today lost ground against the US dollar as the greenback benefitted from positive United States data pointing to that economy tracking towards recovery.

The NZ dollar exchange rate dropped to around US75.95c in the early hours of the morning, when overseas traders are most active, and by 5pm was well down on its US76.42c fix at the same time yesterday.

The kiwi also eased to A75.90c against the Australian dollar at 5pm, which itself was at US99.66c, well off a 28-year peak of US$1.0325 set last week.

The NZ dollar was slightly up at 62.99 against the yen at 5pm, compared with 62.88 yesterday, and similarly, up at 0.5759 euros, against the crossrate of 0.5742 at the same time yesterday. The trade-weighted index fell to 68.40 at 5pm from 68.60 yesterday.

In the United States, the ADP Employer Services report showed US private employers added 297,000 jobs in December, which helped the already-rising greenback. The ADP number far exceeded market expectations for a gain of 100,000: "If, in fact, employment is kicking in, then that would set the tone for self-sustained growth, underpin interest rates, and very much underpin the (US) dollar," said Bob Sinche, global head of FX strategy at RBS Global Banking and Markets in Stamford, Connecticut.

- NZPA