The New Zealand dollar rose after manufacturing data in the US unexpectedly shrank for the first time in three years, highlighting the relative strength of the Australasian economies.

The New Zealand dollar rose to 80.42 US cents at 8am from 80.05 cents at 5pm yesterday. The trade weighted index increased to 72.52 from 72.30.

US manufacturing fell to 49.7 in June on a scale where a reading below 50 shows a contraction. Major northern hemisphere economies are cutting interest rates or keeping them near zero to underpin growth, while in Australia and New Zealand rates aren't seen going lower.

"Australasia is looking relatively attractive as far as investors are concerned," said Alex Sinton, senior dealer at ANZ New Zealand. "The New Zealand dollar looks to stay in the 80 cent range - I don't think we will break into 81 cents."


Globally manufacturing has weakened with industry in the euro-area contracting for an 11th straight month in June, while the region's factories held at 45.1, according to the London-based Markit Economics. China, New Zealand's second-largest export market, released its performance of manufacturing index over the weekend, which expanded at its weakest pace in seven months.

The New Zealand dollar was little changed on 78.33 Australian cents from 78.35 cents at 8am before the Reserve Bank of Australia meets to review its target cash rate this afternoon. Economists are picking the rate will remain unchanged at 3.5 per cent after a quarter-point cut in June and half percentage point cut in May.

"On the day it is really about the RBA," Sinton said. "We think that they will leave rates unchanged."

The European Central Bank and the Bank of England will also meet to review its borrowing costs on Thursday. The ECB is expected to cut its 1 per cent benchmark interest rate by 25 basis points, according to the median average of 57 economists in a Bloomberg survey.

In New Zealand the ANZ commodity price index is set for release this afternoon.

The New Zealand dollar rose to 63.86 euro cents from 63.46 cents and increased to 51.19 British pence from 50.91 pence. The kiwi was little changed on 63.91 yen from 63.83 yen.