The New Zealand dollar fell from a month-high ahead of employment data in the US that may give investors more clarity on how much time the US Federal Reserve will take to raise interest rates again.
The kiwi traded at US66.93c at 5pm yesterday, from US67.46c at the start of the day and from US67.25c late on Thursday. The currency is heading for a 3.5 per cent weekly gain against the greenback. The trade-weighted index was little changed at 72.65 from 72.61 on Thursday.
Investors were waiting overnight for the key US non-farm payrolls report, which was expected to show US employers added 190,000 workers in January, while the unemployment rate remained at 5 per cent.
A number above 190,000 should be positive for the greenback, showing healthy growth in the US labour market, but investors are betting the Fed may hold off on raising interest rates again any time soon, which is taking the shine off the US dollar.
"What we're seeing clearly is a clearout of all the US dollar bulls," said Alex Hill, head of corporate foreign exchange at NZ Forex. "It has been a painful few days for people holding on to US dollar long positions."
Should payrolls prove strong and the greenback not rise, that would show the market is more concerned about reconfiguring its expectations for the next Fed move, Hill said. A key level is US66.80c. If it is above that level early next week it would point to further gains, while a weaker level would point to a decline, he said.
What we're seeing clearly is a clearout of all the US dollar bulls.
Dallas Fed president Robert Kaplan said the central bank should be "patient" on rate increases, reiterating recent comments from other Fed officials. The lower greenback boosted commodity prices and increased the lure of higher-yielding currencies, underpinning the kiwi.
The kiwi rose to A93.03c from A92.78c on Thursday and gained to 45.93p from 45.77p. It advanced to 4.3920 yuan from 4.3849 yuan. It slipped to 77.98 from 78.62 on Thursday, and declined to 59.72c from 60.10c.
The two-year swap rate was unchanged at 2.61 per cent and 10-year swaps were steady at 3.29 per cent.