The New Zealand dollar rose against the euro as European political reports renewed concerns about the region's debt crisis and pushed the common currency down from a two-year high against the greenback.
The New Zealand dollar rose to 62.49 euro cents from 62.03 cents at 5pm in Wellington yesterday. It traded at 84.46 US cents from 84.55 cents.
The euro weakened after a media report that Spanish Prime Minister Mariano Rajoy accepted illegal cash payments prompting calls for his resignation, while an Italian poll showed former Italy Premier Silvio Berlusconi closing the gap on election front-runner Pier Luigi Bersani, according to Bloomberg. Traders locally are awaiting labour cost data today, ahead of the key jobs data on Thursday.
"The market was extremely bulled up on the euro so it is no surprise to see some profit taking," said Tim Kelleher, head of institutional FX sales at ASB Institutional. Today's labour cost figures "will give some insight into wage inflation and hint at what the jobs data will be on Thursday".
Kelleher says the kiwi dollar may trade in a range of 84.25 US cents to 84.60 cents today.
The kiwi declined to 80.88 Australian cents from 81.10 cents late yesterday, when it reached its highest in 2 years. Traders are awaiting the Reserve Bank of Australia's review of interest rates today.
The central bank is expected to keep its cash rate unchanged at 3 per cent, or 50 basis points higher than New Zealand's official cash rate, though it may also indicate the potential time frame for a rate cut in the months to come.
The New Zealand dollar fell to 77.95 yen from 78.40 yen and fell to 53.56 British pence from 53.85 pence yesterday, when it touched a post-float high of 54.11 pence. The trade-weighted index was little changed at 76.15.