NZ dollar volatile overnight

Photo / Dean Purcell

The New Zealand dollar touched its lowest level against the euro in 4-1/2 months, but quickly recovered after data showed an unexpected drop in United States payrolls in September.

The employment weakness in the US bolstered expectations of further easing by the Federal Reserve to revive a spluttering economy.

That should ensure the US dollar's weak trend remains intact as the Fed's quantitative easing measures involve asset purchases meant to push long term yields lower.

The kiwi had been falling against the greenback before the US jobs report early on Saturday. It then changed course and by 8am today was buying US75.64c, up from US75.27c at 5pm on Friday.

Against the European currency, the NZ dollar fell from 0.5395 euro at 5pm on Friday to around 0.5340 early on Saturday, then it changed direction and by 8am today was at 0.5405.

ANZ bank said the US employment data, along with the Columbus Day long weekend in the US, ensured enough volatility for all.

"Both sides of recent ranges were attempted with no real resolution around potential correction of USD weakness," ANZ said.

The kiwi was also at A76.53c against the Australian dollar at 8am today, little changed from its 5pm Friday level, and rose to 62.20 yen from 61.96. The trade weighted index lifted to 67.04 at 8am today from 66.89 at 5pm on Friday.

- NZPA