The New Zealand dollar pared offshore trading gains at the open of local trading as investors digested news the International Monetary Fund will commit US$430 billion in fresh money to protect the world economy against Europe's ongoing debt crisis.
The New Zealand dollar fell to 81.73 US cents at 8am from 81.87 cents at the close of trading in New York on Friday, although it remains above its 81.30 cents local close on Friday at 5pm. The trade weighted index fell to 72.85 from 72.82.
Finance ministers of the Group of 20 nations have been at their annual meeting with the World Bank and IMF in Washington DC, discussing ways to get on top of Europe's woes. Though the latest IMF offer is sizeable, it wouldn't be enough to bailout indebted Mediterranean nations Spain and Italy, said managing director Christine Lagarde, who had hoped to secure up to $600 billion.
"We are still on thin ice really," said Stuart Ive, currency strategist at HiFX. "People will be taking the news on board and saying what does this mean?"
"We may see the kiwi go to 81.40 cents but the strong support will hold at 81.20," he said.
French President Nicolas Sarkozy will progress to the second round of presidential elections, despite trailing in early exit polls. Socialist party candidate Francois Hollande won between 29 per cent and 29.3 per cent of the vote, according to early projections by Bloomberg. The candidates will square off again in two weeks.
"The market is cautions about Hollande - it is generally perceived he will not be such an aggressive defender of the euro," Ive said. "There is a little trepidation in the market."
China will release its manufacturing PMI today. There is no significant data scheduled for release in New Zealand. A review of local monetary policy settings on Thursday is expected to yield no change.
The New Zealand dollar fell to 78.77 Australian cents from 78.79 cents at the close of trading in New York. The kiwi slid to 66.63 yen from 66.76 yen. It was little changed on 61.98 euro cents from 61.9 cents and 50.77 British pence from 50.70 pence.