The New Zealand dollar fell today along with a weak Australian dollar as news that Japanese growth slowed to a crawl added to worries about the pace of the global economic recovery.
The data affected Asian equity markets and came after US data showing a smaller-than-expected rebound in July retailsales and consumer inflation at its lowest level since the 1960s also added to recent evidence that the US economy has slowed considerably.
By 5pm today, the NZ dollar was at US70.37c from US70.56c at 8am and US71.41c at 5pm on Friday. It is around four week lows.
News that the Japanese economy grew just 0.4 per cent in the second quarter on an annualised basis boosted safe haven demand for the yen. The market had been position for a 2.3 per cent expansion.
"Both global and local factors are now bearish for the NZ dollar," said Westpac.
"Locally, waning fundamental support has been manifested by the 40 basis point fall in two-year NZ swap yields during the past two weeks.
"We also note positioning in NZ dollar/US dollar futures contracts last week reversed from historically long levels, another signal pointing to a period of selling ahead," Westpac said.
The NZ dollar also fell to its lowest level against the Australian dollar in more than three months, dropping to around A78.85c early Saturday. By 5pm today it was at A78.96c, down from A79.28c at 5pm on Friday.
Westpac said it has retraced 50 per cent of the April-to-July rally and there is a possibility the sell off could continue.
BNZ markets strategist Mike Jones said the NZ dollar tumbled against the greenback last week as it faced twin headwinds of rising global risk aversion and reduced yield support.
The NZ dollar was 0.5501 euro at 5pm from 0.5555 at the same time on Friday. It was at 60.39 yen from 61.46 yen on Friday.
The trade weighted index was 65.91 at 5pm from 66.70 on Friday.
