New Zealand dollar sellers came out in force yesterday, ahead of a three-day Labour Weekend holiday.
By 5pm, the kiwi had slipped to US41.56c from US41.77c at Thursdays's close, driven largely by US investors looking to sell down their antipodean holdings, dealers said.
"We have seen a bit of a selloff in both kiwi and aussie during the day," Bank of New Zealand forex manager Greg Ball said.
"It really started in late New York trading. It appeared that there were a couple of US names waiting to access liquidity when the Wellington market opened to sell both kiwi and aussie. That's where the real moves happened."
The Australian unit also lost ground on the back of that selldown, closing locally at US50.72c from US50.88c late Thursday.
Mr Ball said it appeared that interest in the trans-Tasman currencies earlier in the week, sparked by possibile merger and acquisition activity in the region, had been surpassed by fears of a worsening slowdown in global economic growth.
"For a while we thought that the economies of New Zealand and Australia, especially early in the week, were going to do a little bit better. A couple of M&A deals that people were sniffing around at - in NZ the Contact deal and in Australia the Western Mining deal - gave some support to both currencies," Mr Ball said.
"But the reality is somewhat different. Sentiment has turned since both those deals have gone off the boil and we are focusing on the global growth story and that is why things have been sold off.
"We are getting pretty weak numbers out of the States," he added.
US data released overnight painted a particularly gloomy outlook for the world's largest economy.
US jobless claims rose more than expected, maufacturing activity plummeted in October, and the Federal Reserve Bank of Philadelphia business conditions index tumbled sharply, from -7.3 to -27.4.
The kiwi attracted some domestic support around US41.50c, Mr Ball said, but the local unit was still likely to face further downside pressure in New York overnight.
He picked the kiwi would range between US41.35c and US41.65c going into the holiday weekend.
Some investors would be floating around looking to trade in the kiwi on Monday, despite the Labour Day holiday, but the local market won't reopen for business until Tuesday, he said.
The kiwi also lost ground against the Australian dollar on the cross today, closing at A81.91c (A82.14c at yesterday's close), while the Australian dollar was buying $NZ1.2211c ($NZ1.2181).
On the other crosses at 5pm the kiwi was buying 0.4601 euros (0.4616 at yesterday's close), 50.36 yen (50.58), 28.81 pence (28.86), 0.9000 marks (0.9028), and 0.6806 Swiss francs (0.6825).
The 90-day bill yields were steady at 5.10 per cent, the trade-weighted index was at 49.41 (49.63) and the monetary conditions index was at minus 914 (minus 899).
Among the bonds, the March 2002s were at 4.91 per cent (4.93), the April 2004s were at 5.24 per cent (5.28), the November 2006s were at 5.82 per cent (5.87) and the November 2011s were at 6.39 per cent (6.42).
- NZPA
<i>Currency:</i> Kiwi loses ground as sellers come out of woodwork
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