The New Zealand dollar rebounded after touching a fresh two-and-a-half year low as investors sold US dollars, taking advantage of the greenback at its highest level in more than five years.
The kiwi touched 76.21 US cents overnight, its lowest since June 8, 2012, and was trading at 76.71 cents
at 8am in Wellington, from 76.43 cents at 5pm yesterday. The trade-weighted index was little changed at 77.50 from 77.48 yesterday.
The US dollar index, which measures the greenback against a basket of currencies, declined after touching 89.550 yesterday, its highest level since March 2009. The New Zealand dollar has been under pressure this week amid US dollar strength following a strong US payrolls report on Friday, amid concerns weak Chinese trade data yesterday will hurt New Zealand exporters, and on speculation Fonterra Cooperative Group will cut its forecast payout to dairy farmers at a board meeting this week.
"Kiwi had a new two-year low overnight on the back of the range break as we broke through the bottom of the boundary zone that had been supporting us, on the back of the weaker Chinese trade data yesterday," said ANZ Bank New Zealand senior FX strategist Sam Tuck. "Markets had been quite bullish and are taking opportunities to take some US dollars off the table. The kiwi recovered overnight on the back of that US dollar profit taking and also short-term money expressing disappointment over the failure to carry on from that point."
A weaker US labour market report overnight also dented demand for the greenback. Tuck said. The Federal Reserve's Labor Market Conditions Index, a compilation of 19 labour market measures, fell to 2.9 in November from 3.9 in October.
