The New Zealand dollar fell below 80 US cents overnight as German finance minister Wolfgang Schaeuble warned that this weekend's summit "would not produce a miracle cure" for the euro zone's sovereign debt crisis.
The kiwi dollar recently traded at 79.35 U.S cents from 80.07 cents at 5pm yesterday. Thetrade-weighted index was at 69.63 at 8am from 70.09 at 5pm yesterday.
Investors' appetite for higher-yielding, or riskier, assets has been high leading up to this weekend's summit, and Schaeuble's downbeat comment at a Dusseldorf press conference set off a global dip in equity and commodity markets.
The kiwi had held at above 80 cents at close of local trading yesterday, having soared late on Friday in the US, amid optimism Europe's leaders would manage to tackle debt problems in the region that have threatened to derail global growth.
"Risk is back off the table" after the German minister's comment, said Alex Sinton, a senior dealer at ANZ New Zealand. The New Zealand dollar is seen to be a high risk currency for traders, and it will take a hit when global equity and commodity markets do, he said.
Finance ministers including UK chancellor George Osborne and French finance minister Francois Baroin have been upbeat about progress ahead of the European Council meets on October 23.
Group of 20 finance chiefs who met last weekend said they're ready to work together to help avert any defaults in Europe.
"Global financial market sentiment has improved over the last week, as participants become more confident that progress is being made on resolving the European debt crisis," said ASB chief economist Nick Tuffley. The kiwi is likely to be driven by offshore developments this week, in the absence of local data, he said.
The New Zealand dollar fell to 77.80 Australian cents from 77.82 cents at 5pm yesterday, and fell to 60.96 yen from 61.86. It declined to 57.70 euro cents from 57.88, and slipped to 50.33 pence from 50.73 pence yesterday.
Five economists and market strategists surveyed by BusinessDesk yesterday said the kiwi may trade in a range between 79.20 US cents and 81.50 cents this week. It may trade between 76.80 Australian cents and 78.30 cents.
Migration figures for September and the Labour Cost Index for the June quarter are due on Friday.
