The New Zealand dollar weakened overnight as traders who had benefited from its recent strength took profits in the absence of any data likely to push it higher heading into the Christmas holiday period.
The kiwi declined to 67.86 US cents at 8am in Wellington, from 68.14 cents at 5pm yesterday. The trade-weighted index fell to 73.79 from 74.02 yesterday.
The local currency has advanced 0.9 percent so far this week as a string of weaker US economic data kept the greenback out of favour. Traders who benefited from so-called 'long' bets anticipating the kiwi's rise are now taking profits heading into a quiet holiday period with a lack of data to drive further moves in the currency.
"The recent US dollar weakness that we have seen and weakness in the commodity markets has been a little bit overturned overnight as people bank profits for the holiday period," said Stuart Ive, senior foreign exchange dealer at OMF. "It's a case of people banking profits as there's no real reason for the kiwi to gain any further at this point in time without any new data so really it is a case of people squaring up their books for the holiday period."
