Steep fall for NZ dollar this morning

After streaking to a new 11-month high against the greenback, the New Zealand dollar has fallen away steeply as risk aversion rose.

By 8am today the kiwi was buying US67.48c, down from its 5pm Friday level of US67.87c.

On Friday, the NZ dollar was boosted by better-than-expected retail sales data for the June quarter, and a report from the Real Estate Institute of New Zealand which supported the view that the residential property market was stabilising.

Around midnight on Friday the NZ dollar peaked above US68.80c.

BNZ senior strategist Danica Hampton said solid demand for both the NZ and Australian dollars from a mixture of short term speculative players and model accounts propelled the kiwi to its high point.

But disappointing US data and faltering equity markets saw the NZ dollar knocked from its highs, Ms Hampton said.

For the coming week, with global growth expectations and risk appetite starting to look a little shaky, the NZ dollar looked vulnerable to a correction lower against the US currency.

The Japanese yen rose against the euro and the US dollar after a report showed US consumer sentiment worsened in August, adding to concerns about the outlook for the US economy and increasing risk aversion.

Some analysts also said a drop in European and US stocks after sharp gains earlier in the week contributed to the new bout of risk aversion.

Against the Japanese currency, the NZ dollar was down to 63.99 yen at 8am from 64.58 at 5pm on Friday, while the kiwi opened locally barely changed against the European currency at 0.4755 yen.

The kiwi rose to A81.37c against the Australian dollar at 8am from A80.58c at 5pm on Friday, while the trade weighted index slipped to 62.97 from 63.10.

- NZPA