The New Zealand dollar declined to a week low against its Australian counterpart on optimism about economic growth in China, Australia's largest trading partner.
The kiwi slipped as low as 87.17 Australian cents this morning, and traded at 87.20 Australian cents at 8am in Wellington, from 87.68 cents on Friday. The local currency was little changed at 80.34 US cents from the New York close of 80.43 cents, and from 79.93 on Friday in Wellington.
The New Zealand dollar, which has appreciated 13 per cent against the Australian dollar this year, gave up some of its gains after Chinese data on Friday gave investors confidence about that nation's economy, which buoyed optimism about Australia's prospects. The Reserve Bank of Australia's lack of firm guidance on further rate cuts in its statement of monetary policy is also supporting the Aussie.
"The Australian dollar has done better over the weekend than we did, on good Chinese data, particularly the industrial production side, and the RBA monetary policy statement that was less than enthusiastic on more rate cuts," said Peter Cavanaugh, client adviser at Bancorp Treasury Services.
"The New Zealand dollar's rise was stellar and inconsistent with any new data."
Cavanaugh said the cross rate will likely trade at these levels until given direction by new data.
Tomorrow, Australian business confidence and the pre-election fiscal update will help shape currency markets, ANZ Bank New Zealand economist Sharon Zollner said in a note today.
In New Zealand today, the statistics department releases food prices for July at 10:45am.
The New Zealand dollar advanced to 77.27 yen at 8am in Wellington from 77.06 yen on Friday. The kiwi rose to 60.24 euro from 59.72 euro and gained to 51.84 British pence from 51.42 pence. The trade-weighted index jumped to 75.32 from 75.01 on Friday.