The New Zealand dollar got dragged down after local figures showed building consents dropped in January.
The New Zealand dollar got dragged down after local figures showed building consents dropped in January.
The New Zealand dollar fell as data painted a grimmer picture of local growth and economists at the country's biggest lender joined rivals in predicting the Reserve Bank will cut interest rates even further this year.
The dollar dropped to 65.72 US cents at 5pm yesterday in Wellington from 66.39cents at 8am and 66.25 cents on Friday in New York. The trade-weighted index declined to 71.82 from 73.43 last week.
Risk sensitive currencies such as the dollar started the local trading session on the back-foot after upbeat US economic data eased concerns about the strength of the world's biggest economy, and the New Zealand dollar got dragged down after local figures showed building consents dropped 8.2 per cent in January, while firms' confidence dimmed in February. At the same time, ANZ's economists joined other forecasters in predicting two cuts by the Reserve Bank this year, having previously projected no change from the current 2.5 per cent level.
"There was a perfect little storm with the building consents and the ANZ business outlook being quite a lot weaker today," said Martin Rudings, senior dealer foreign exchange at OMF in Wellington. "The kiwi's just come off the top of the range and we need to be careful we don't get too bearish."
New Zealand's two-year swap rate fell three basis points to 2.38 per cent, and 10-year swaps extended their decline to a new record low 3.05 per cent.
Traders will be watching the upcoming GlobalDairyTrade auction in the US, with futures pricing indicating a gain of between 5-and-10 per cent. That would end the auction's string of declines since the start of the year, which has added pressure on the country's biggest export earner, dairy.
A BusinessDesk survey of nine analysts predicts the kiwi will trade between 64.50 US cents and 67.80 cents this week. Six expect a decline, two are picking it to be neutral with a slight negative bias and one bets it will be flat.
The kiwi fell to 92.02 Australian cents at 5pm yesterday in Wellington from 92.88 cents on Friday in New York.
The local currency dropped to 4.3048 Chinese yuan from 4.3321 yuan on Friday in New York, and fell to 74.50 yen form 75.52 yen last week. It declined to 47.44 British pence from 47.75 pence last week, and fell to 60.18 euro cents from 60.57 cents.
