NZ dollar falls against US overnight

The kiwi dollar rose to 63.39 euro cents overnight. Photo / File

The New Zealand dollar fell against the greenback as investors pause to consider the impact of the Federal Reserve's latest quantitative easing programme, pushing stock markets and other risk-sensitive assets lower.

The kiwi dollar declined to 82.57 US cents at 8am from 82.74 US cents at 5pm yesterday.

The trade weighted index was little changed at 73.02 from 73.08.

Equity markets on both sides of the Atlantic extended this week's decline with Wall Street's Standard & Poor's 500 Index falling 0.5 per cent and France's CAC 40 index down 0.5 per cent.

Investors are speculating more needs to be done to help fix the world's largest economy, after Fed chairman Ben Bernanke announced the central bank would expand its holdings of long-term securities with open-ended purchases of US$40 billion of mortgage debt a month.

"People are just reassessing the idea that QE3 will save the world," said Mike Jones, currency strategist at Bank of New Zealand. "We are seeing more profit taking than anything else - the
New Zealand dollar is just settling in before another run higher."

US manufacturing figures added to the glum mood, falling to its lowest level since April 2009. The New York Empire Manufacturing survey deteriorated to minus 10.41 in September, down from minus 5.85 in August. Economists had been expecting minus 2.

The New Zealand dollar rose to 78.84 Australian cents from 78.63 cents yesterday ahead of the release of minutes to this month's Reserve Bank of Australia meeting. Australia's central bank left its official cash rate unchanged at 3.5 per cent.

"The minutes will be pored over for a view on the RBA's opinion over the international backdrop which is deteriorating," Jones said. "The risk going into the minutes is for a bit of a relief rally for the Aussie and the kiwi."

New Zealand's outgoing central bank governor Alan Bollard kept the official cash rate at 2.5 per cent last week, saying the weak outlook for the country's trading partners threatens economic growth and the strong kiwi dollar is hurting exporters and local manufacturers.

There is no significant New Zealand data set for release today.

The New Zealand dollar was little changed at 63 euro cents at 8am from 63.01 cents yesterday, and slipped to 50.79 British pence from 51.01 pence. It rose to 65.01 yen from 64.81 yen.