The New Zealand dollar is heading for a 1.5 per cent weekly drop against the greenback as investors continue to spurn risk-sensitive assets against the backdrop of weak Chinese stock markets, and ahead of United States employment figures that keep alive a rate hike by the Federal Reserve this year.
The kiwi fell to US63.59s at 5pm yesterday from US64.53 cents a week ago in New York. It traded at US63.92c at 8am yesterday and US63.41c on Thursday. The trade-weighted index is heading for a 0.8 per cent weekly decline, trading at 69.27 at 5pm yesterday, up from 68.94 on Thursday after it gained against the euro on the prospect of more quantitative easing in the eurozone.
A BusinessDesk survey of 10 currency advisers predicted the kiwi would trade between US62.50c and US67.50c this week. Six expected it to fall, two said it might gain and two expected it to stay largely unchanged.
Market volatility calmed on Wednesday after Chinese state funds bought stocks to prop up equities before a two-day holiday for World War II Victory Day commemorations, which weighed on risk-sensitive currencies such as the kiwi. As that draws to a close, investors are unsure how Chinese stocks will react when they reopen on Monday.
"The market's taking quite a lot of direction from the back of China's equity markets, which have been bouncing around 3 or 4 per cent either side of where it's opening," said Auckland HiFX trader John Chisholm.
