The New Zealand dollar had a look below US58c today when stop loss selling and a return of risk aversion put it under pressure.
Another meltdown on Wall Street overnight ratcheted up the risk aversion story and there was nowhere for the currency to go but down. Downit went to US57.90c in morning trading from US59.30c at 5pm yesterday.
"It was equity weakness again. It pushed the aussie and kiwi dollars down," said Jake Soanes, head of financial market sales at Westpac.
He said when the currency broke through US58c there was a run of stop loss orders. Then exporters started buying, taking the currency higher. It was at US58.68c at 5pm.
Mr Soanes said the turmoil in international markets was a bigger issue for investors than the New Zealand election on Saturday but investors did want to see a clear result from the election.
The New Zealand dollar lost ground against the yen which benefited from a safe haven status. The NZ dollar was at 57.15 yen at 5pm from 57.98 yen yesterday.
Overnight the New Zealand dollar gained against the euro after the European Central Bank (ECB) cut interest rates by half a percentage point, disappointing investors seeking a more aggressive, growth-supportive move.
But by 5pm the NZ dollar was buying 0.4605 euro, unchanged from yesterday.
The ECB cut, to 3.25 per cent, was relatively small compared to the Bank of England's shock decision to slash British rates by 150 basis points to 3 per cent - their lowest in more than half a century.
The NZ dollar was little changed against sterling at 37.45p.
Against the Australian dollar it was A87.90c from A87.98c yesterday. The trade weighted index was 59.37 at 5pm from 59.73.
