NZ dollar tumbles on falling risk sentiment

Photo / Dean Purcell

The New Zealand dollar fell to a fortnight-low against the greenback, after a weaker-than-expected United States jobs report suggested the global recovery may be running out of steam and diminished investor taste for risk.

It enhanced the safe-haven appeal of the US dollar, taking the euro below US$1.19 for the first time in more than four years.

The euro did recover some losses as strong German manufacturing data prompted investors to book profits after the currency's recent slide.

European corporate demand also helped the euro rebound but it remained well below US$1.20, a key psychological level pierced at the end of last week after Hungary's warning about its deficit stoked investor worries of the severe debt problems plaguing some European countries.

By 8am today the NZ dollar was buying US65.83c, down from US68.44c at 5pm on Friday to around its lowest level in a fortnight, and apart from a brief dip lower on May 25 the lowest level in 10 months.

The kiwi also fell to 0.5524 euro at today's local open from 0.5621 at 5pm on Friday.

BNZ strategist Mike Jones said that, aside from the global focus, the coming week would be busy on the home front.

The Reserve Bank would be announcing its decision on interest rates on Thursday, and BNZ economists thought the time had come for it to start raising rates.

Domestic data had been stronger than expected and long term inflation expectations had crept to an uncomfortable level, said Jones.

The NZ dollar did rise against the Australian dollar, to A81.22c at 8am today from A80.99c at 5pm on Friday, but was down to 60.31 yen at 8am from 63.44 at Friday's local close. The trade weighted index dropped to 65.12 at 8am today from 66.79 at 5pm on Friday.

- NZPA