NZ dollar drops to week low vs surging greenback

Photo / Dean Purcell

The New Zealand dollar fell to its lowest level in a week against the greenback, which was boosted by a batch of upbeat United States data that affirmed the view that the world's largest economy was on a steady path to recovery.

The NZ dollar dropped to around US75.95c early today and by 8am was at US76.08c, down from US76.42c at 5pm yesterday.

In the United States, the ADP Employer Services report showed US private employers added 297,000 jobs in December, further propelled an already rising greenback.

The ADP number was the largest increase on record, with data going back to 2000, and far exceeded market expectations for a gain of 100,000.

A separate report showing the US services sector expanded in December also lifted the greenback.

"If, in fact, employment is kicking in, then that would set the tone for self-sustained growth, underpin interest rates, and very much underpin the (US) dollar," said Bob Sinche, global head of FX strategy at RBS Global Banking and Markets in Stamford, Connecticut.

The kiwi also eased to A76.03c against the Australian dollar, but was up to 0.5781 euro at 8am from 0.5742 at 5pm yesterday, and rose to 63.30 yen from 62.88. The trade weighted index was up to 68.68 at 8am from 68.60.

BNZ currency strategist Mike Jones said that with commodity markets still revelling in New Year's cheer, growth-sensitive currencies such as the NZ and Australian dollars had held up better than most against the US dollar.

Part of the NZ dollar's strength during the holiday period was thought to reflect year-end positioning and whippy holiday-thinned markets, Mr Jones said.

As liquidity returned and fundamentals began to reassert themselves, he would not be surprised to see a mild downward correction in the currency.

- NZPA