NZ dollar loses ground overnight

The New Zealand dollar lost ground overnight on a warning from China that the global economy remained vulnerable to sovereign debt risks capped demand for higher-risk currencies.

At the same time, investors were wary of taking on big positions during market holidays in Britain and the United States.

Around 8am today the NZ dollar was buying US67.96c, down from US68.26c at 5pm yesterday, while it dropped to 61.93 yen at the local open from 62.43.

The kiwi was also down to 0.5525 euro at 8am from 0.5543 at the local close, and was little changed against the Australian dollar at A80.46c at the local open.

The trade weighted index was 65.97 at 8am today from 66.27 at 5pm.

BNZ strategist Mike Jones said the NZ dollar spent the 24 hours to 8am today tracking a narrow range between US67.60c and US68.40c. The kiwi continued to encounter stiff resistance around the US68.50c mark.

For today, direction for the NZ dollar was expected to come from across the Tasman, with a wealth of Australian data due for release, along with the Reserve Bank of Australia's interest rate decision due at 4.30pm (NZT), Jones said.

In this country, the odds of the Reserve Bank lifting interest rates next week rose, imparting modest support to the NZ dollar, in the wake of yesterday's May survey of business from the National Bank.

The survey implied that gross domestic product growth would soon be above trend, inflationary expectations were pushing higher, and even the lagging indicators of employment and investment were proving to be robust, said Jones.

- NZPA