The New Zealand dollar dropped to an eight-week low after weaker-than-expected consumer spending the US sapped investors' appetite for riskier, or higher-yielding, assets.
The Standard & Poor's 500 index fell 0.4 per cent after US retail sales grew 0.3 per cent last month, 0.2 percentage points below expectations.
That prompted
a sell-off in risk-sensitive assets such as the Australian and New Zealand dollars, even as dairy prices rose to new highs on Fonterra's online trading platform. The price of whole milk powder, which dominates trading, surged 7.9 per cent to US$4,320 a tonne.
Stocks on Wall Street were lower with "short-term traders looking at the retail numbers," said Imre Speizer, market strategist at Westpac Bank. "The kiwi's momentum is firmly downwards, there's no question about that."
The kiwi dropped to 75.20 US cents from 75.61 cents yesterday, and declined to 67.33 on the trade-weighted index of major trading partners' currencies from 67.69.
It fell to 63.01 yen from 63.15 yen yesterday, and decreased to 75.28 Australian cents from 75.45 cents. It retreated to 55.65 euro cents from 56.04 cents yesterday, and sank to 46.55 pence from 47.18 pence.
Speizer said the currency may trade between 74 US cents and 75.50 cents today with the negative tone hanging over its head.
The Bank of England is coming under pressure to reassess its loose monetary policy after inflation rose to an annual 4 per cent last month. Markets are beginning to price in early rate hikes by the British central bank, which is still printing money to try and drag the English economy out of the doldrums.
That came as data showed Europe's regional economy grew a slower than expected 0.3 per cent in the fourth quarter. Germany's Zew survey of business confidence beat expectations for the present expectations, but disappointed in future sentiment.
A slew of US data including housing starts, industrial production, capacity utilisation and the Federal Open Market Committee meeting minutes will be closely watched when they are released on Wednesday in the US.
