The New Zealand dollar pared its loss after stronger-than-expected US labour data stoked optimism about the recovery of the US economy, which would let the Federal Reserve continue to trim its asset purchase programme, and as Chinese trade figures disappointed.
The kiwi rose to 84.61 US cents at 5pm in Wellington from 84.38 cents at 8am, and unchanged from 84.61 cents at the New York close on Friday. The trade-weighted index fell to 79.19 from 79.28 last week.
US employers added 175,000 jobs last month, ahead of the 149,000 new jobs predicted, as the harsh winter conditions didn't deter hiring as much as anticipated. That underpinned appetite for the greenback as investors expect the Fed to keep scaling back its quantitative easing programme, which has been debasing the US currency by increasing circulation. A sharp decline in Chinese exports also weighed on the kiwi.
"Hope for kiwi exporters stayed alive after the terrible Chinese trade balance and pretty good numbers out of the States," said Alex Hill, head of dealing at HiFX in Auckland. "If we get a string of good US data, we could provide the opportunity for that to become the flavour of the month" and break the kiwi out of its recent 2 US cents range, he said.
Traders are looking to this week's New Zealand Reserve Bank meeting on Thursday, when governor Graeme Wheeler is expected to embark on a round of higher interest rates.
HiFX's Hill expects the RBNZ will hike the benchmark rate two or three times this year from its record-low 2.5 percent, which would remove the added stimulus put in place in March 2011 when the key rate was cut in response to the Canterbury earthquake which levelled the country's second biggest city.
US economic figures at the end of the week, including retail sales and unemployment claims, will gain attention to gauge the strength of recovery in the world's biggest economy.
A BusinessDesk survey of 11 traders and strategists predicts the kiwi may trade between 82.75 US cents and 86.35 cents this week. Five expect the currency to advance while four forecast a drop and two predict little change.
The kiwi fell to 87.22 yen at 5pm in Wellington from 87.43 yen at the New York close on Friday, and gained to 93.56 Australian cents from 93.32 cents last week. It was little changed at 60.92 euro cents from 61.01 cents last week, and traded at 50.56 British pence from 50.60 pence.