By ELLEN READ AND AGENCIES
The New Zealand dollar surged against the US currency as weak American jobs data revived fears about the strength of US economic recovery.
After soaring in Friday's offshore session, the kiwi consolidated gains yesterday to sit at 65.37USc at 5pm, up from 64.40USc.
Its strength came at the expense of the US dollar, which slumped after weak July jobs numbers.
The US dollar fell across the board on Friday as a far weaker than expected US employment report cast doubt over the health of the economy and the pace at which the Federal Reserve will raise interest rates.
Low rates diminish the allure of a currency because investors can get higher returns on comparable assets in other countries. On the flip side, high yielding currencies such as the New Zealand and Australian dollars tend to rise.
Deutsche Bank chief economist Ulf Schoefisch said both the New Zealand and Australian currencies rose after the payrolls data, "possibly because the market now perceives risks to global growth, particularly also arising from continued high oil prices".
He expects the kiwi to consolidate at current levels but added "it is hard to see anything other than a gradual further weakening of the US dollar going forward, both this week and in the further period ahead".
Schoefisch said this Friday's (US time) US trade figures were likely to confirm a continued widening of the external deficit and would refocus attention on what was a key structural problem for the greenback.
ASB Securities' Stephen Wright said that while the New Zealand market did suffer from the negative US sentiment, the start of the week was not as bad as some had anticipated.
While the weak US data has taken some pressure off oil prices - as any stumbling in the world's biggest economy and biggest oil consumer could reduce petroleum demand and therefore price pressure - concerns remain.
Strong US demand is one factor behind the high oil prices so if that economy cools it could reduce the pressure.
Any price slide is expected to be limited, with a string of uncertainties lingering on supply.
Kiwi advances on greenback
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