KEY POINTS:
Continued jitters in the global carry trade market sent the New Zealand dollar lower today.
The kiwi dollar closed at US75.99c, a decent recovery from the day's low of US75.55c but well down on Friday's close of US76.80c.
Dealers said investors had been busily unwinding trades in high-yielding but "risky" currencies such as the kiwi, after global sharemarkets fell sharply in response to continued concerns about the US credit market.
The New Zealand dollar fell to 89.24 yen, a slight improvement on a recent two-month low of 88.60 yen (compared to Friday's close at 91.51 yen).
The kiwi was also heavy against other crosses, including a two-month low against the Australian dollar at A88.75c (A89.56c).
The TWI was 72.64 compared with 73.60 on Friday.
Second quarter wage data out today came in on expectations with private sector labour costs up 0.7 per cent on the previous quarter, while an employment survey suggested a continued tight labour market.
Mark Elliott, a senior dealer with ANZ Investment Bank, said all eyes would be on the US and in particular the Federal Reserve's interest rate decision on Wednesday morning NZT.
"A lot of people are wondering if this is just a risk-aversion type correction or something far more systemic and ugly," he said.
Although most people are predicting the Fed will leave rates unchanged, Mr Elliott said, "this is a pretty extraordinary move in the credit markets and stock markets".
"If the Fed see this as something potentially damaging to the banking system, then I think you'd see rates cut very quickly."
Meanwhile, the US dollar fell to a four-month low in Tokyo of 117.19 yen, extending losses after US share prices tumbled on Friday after Bear Stearns said credit markets were in their worst shape in two decades.
The euro rose as high as $1.3840 in Tokyo, nearing a record high of $1.3853 hit in late July.
Rates:
5pm today 5.15pm Friday
NZ dlr/US dlr US76.84c US76.80c
NZ dlr/Aust dlr A88.75c A89.56c
NZ dlr/euro 0.5490 0.5604
NZ dlr/yen 89.24 91.51
NZ dlr/stg 37.13p 37.72p
NZ TWI 72.64 73.60
Australian dollar US85.45c US85.75c
Euro/US dollar 1.3814 1.3705
US dollar/yen 117.63 119.19
- NZPA