The New Zealand dollar dropped to a four-month low as US President Donald Trump unveiled his much-vaunted tax reform plans, while trade-orientated nations came under pressure on reports the US plans to quit the North American Free Trade Agreement.
The kiwi fell as low as 68.68 US cents, the lowest since Dec. 23, and was trading at 68.93 cents as at 8am in Wellington from 69.26 cents yesterday. The trade-weighted index declined to 74.88 from 75.05 yesterday.
The greenback garnered support as US Treasury Secretary Steven Mnuchin announced plans to lower personal and company taxes in an effort to stoke economic growth.
However, Mnuchin couldn't guarantee the plan would be revenue neutral, something Congressional House Speaker Paul Ryan has insisted on, meaning it might be an uphill battle to gather legislative support to pass the deal. Meanwhile, Politico reported the White House is considering signing an executive order withdrawing from NAFTA, after ordering tariffs be imposed on certain Canadian products, sapping demand for the Mexican peso.
"Markets continue to weigh up the validity of the Trump trade, with tax-cut rhetoric on one hand but growth-unfriendly anti-trade talk on the other," ANZ Bank New Zealand senior economist Sharon Zollner said in a note.
The kiwi "lost ground against all 10 majors as commodity currencies remain broadly out of favour, possibly partly related to another anti-trade news story emerging overnight."
The kiwi rose to 13.2309 Mexican pesos from 13.0666 pesos yesterday and was little changed at 93.80 Canadian cents from 93.92 cents yesterday.
The local currency traded at 92.12 Australian cents from 92.06 cents yesterday. Data yesterday showed Australian inflation rose at a slower pace than projected, firming up expectations New Zealand will raise interest rates before its neighbour.
New Zealand Finance Minister Steven Joyce will deliver a pre-Budget speech in Wellington today, where investors will be looking for clues about new spending programmes of hinted at tax cuts.
The kiwi fell to 4.7498 Chinese yuan from 4.7674 yuan yesterday and declined to 76.52 yen from 77.05 yen. It edged down to 63.19 euro cents from 63.28 cents yesterday and declined to 53.64 British pence from 53.94 pence.