The New Zealand dollar dropped yesterday as traders waited for the release of American employment data, due overnight, and possible statements from a major European Union meeting.
It finished at 42.56USc, down from 43c on Thursday, back-tracking with the Australian dollar, which closed locally at 54.55USc, down from 54.88c.
A director at Treasury consultancy Greenwich Financial Services, Derek Rankin, said the kiwi was at a pivotal point and it would soon be clear whether the rapid 10 per cent gain from its record 38.95USc low in October was merely a corrective bounce or the start of a long-term recovery.
Mr Rankin said global markets were taking the US employment data as a measure of how much the American economy was slowing.
If the numbers are ugly, the greenback will weaken, allowing the the euro, aussie and kiwi team to appreciate. But a European Union meeting in Nice is also being watched. Mr Rankin said that in the past, comments from such meetings had affected the euro.
"Generally speaking, anything that weakens the euro weakens the New Zealand and Australian dollars."
Mr Rankin said people had sold down long kiwi positions because of the various risks posed over the weekend.
The employment data could push it below 42USc.
"Over the course of the next week we're going to find out if the New Zealand dollar is actually going to test down below 42USc or whether we're going to break through that 43.20c level.
"If we do that then the market will look seriously at taking it higher.
Finance house Deutsche Bank yesterday said the kiwi could rise to 45USc before March.
- NZPA
<i>Currency:</i> Dollar waits for US jobs news
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