The New Zealand dollar may trade in a range of 85 US cents and 86 cents today. Photo / File
The New Zealand dollar may trade in a range of 85 US cents and 86 cents today. Photo / File
The New Zealand dollar dropped as investors continue to favour the US on signs of a revival in the world's largest economy.
The kiwi fell to 77.29 US cents from 77.71 cents at 5pm in Wellington Friday and 77.52 cents at the New York close Friday, when it dipped below77 cents for the first time in a year.
The Federal Reserve last week said it may wind back its US$85 billion a month of bond buying this year and end the stimulus programme in 2014. The Federal Open Market Committee said that risks to the US economy have decreased, as they lowered forecasts for unemployment and inflation this year. That has boosted the greenback and lessened demand for more risk-sensitive currencies such as the kiwi.
"I expect the kiwi to retest 77 US cents in the early part of this week," said Sam Tuck, senior manager FX at ANZ New Zealand. "Volatility will remain high."
In New Zealand today, reports are due on credit card spending and migration. They follow a slew of recent upbeat reports on consumer confidence, manufacturing and service sector activity.
"The New Zealand economy seems to be doing well and probably will continue to do well but I don't think that's what is driving things," Tuck said. "It's more an assessment of the US economy."
In the US today, investors will be eyeing the Chicago Fed national activity index and the Dallas Fed manufacturing survey and a speech by the hawkish Dallas Fed President Richard Fisher in London.
The trade-weighted index weakened to 73.09 from 73.13 at 5pm in Wellington Friday. The Reserve Bank's most recent quarterly projections for the TWI didn't see the currency at such low levels until mid-2015.
The kiwi fell to 83.95 Australian cents from 84.34 cents at 5pm in Wellington Friday and dropped to 75.71 yen from 75.87 yen. The local currency edged up to 59.04 euro cents from 58.71 cents Friday and gained to 50.26 British pence from 50.11 pence.
