The dollar slipped back below 73 US cents as investors' appetite for riskier assets waned as rumours circulate that the US national economic council chief Gary Cohn might resign and as Spain became the latest target of a terror attack.
The kiwi fell to 72.86 US cents as at 8am in Wellington from 73.28 cents yesterday. The trade-weighted index declined to 76.88 from 77.13.
The Chicago Board Options Exchange's volatility index jumped 32 per cent to 15.55 and stocks on Wall Street dropped as investors scaled back their bets on risk-sensitive assets.
Rumours that Cohn plans to quit his role in the White House raised fears that US President Donald Trump's pro-business plans could be derailed, while a terror attack in Barcelona killing at least 13 people and injuring 50 others added to the downbeat tone in financial markets.
"Market volatility has been remarkably contained to date given the degree of policy uncertainty, and last night's price action/lift in volatility is just a case of some catch-up," ANZ Bank New Zealand chief economist Cameron Bagrie said in a note.
"Clearly plenty happening and the NZD finds itself in roughly the same position as yesterday. Our view remains unchanged and we continue to favour fading NZD strength."
