The New Zealand dollar fell from a post-float record after sharply weaker-than-expected US employment report sapped demand for higher yielding or riskier assets.
The kiwi dollar pared its gains from a high of 83.83 US cents in New York on Friday after the US non-farm payroll showed the world's biggest economy added just 18,000 jobs in June, well short of the 105,000 improvement forecast by a Bloomberg poll.
That triggered a sharp pull back in risk appetites, with the Standard & Poor's 500 Index closing 0.7 per cent lower at 1,343.80, while Europe's Stoxx 600 shed 0.8 per cent to close at 273.76. Commodity prices fell 0.8 per cent to 343.55, as measured by the 19-commodity Thompson Reuters Jefferies CRB index.
"We had a dip in the kiwi after the US employment numbers, but relatively speaking we're not in that bad a shape," said Alex Sinton, a senior dealer at ANZ New Zealand. "It's a step in the direction that will provide some relief to exporters, but even a two cent correction is not that notable given where we are now relative to last week."
The kiwi recently traded at 83.50 US cents, down from 83.68 cents on Friday in New York, and was little changed at 72.24 on the trade-weighted index of major trading partners' currencies from 72.26. It rose to 77.88 Australian cents from 77.75 cents last week, and slipped to 67.34 yen from 67.37 yen. It gained to 58.58 euro cents from 58.57 cents on Friday, and fell to 52.02 pence from 52.14 pence previously.
Risk appetite may fall further this week, taking growth-linked assets with them, amid fears the Italy could be the next country to fall victim to the European debt crisis.
Top European officials scheduled an emergency meeting over the weekend to address the crisis as a whole, but market rumours claimed the country would be high on the agenda after a sharp selloff of Italian assets on Friday, according to Reuters. Italy has the highest sovereign debt ration relative to its economy in the euro zone after Greece.
China's trade surplus fell 18.2 per cent to US$44.93 billion in the first six months of the year, according to official figures, as imports rose while exports fell, "a sign perhaps that monetary tightening in China is starting to bite," Sinton said.
The kiwi may trade in a range of 83.30 US cents and 83.95 cents, Sinton side, with the bias towards the downside.