The New Zealand dollar declined on concern about weak commodities after oil dropped and prices at the GlobalDairyTrade auction slid for a third straight session this year.

The kiwi touched a low of 64.60 US cents following the overnight dairy auction, and was trading at 64.89 cents at 8am in Wellington, from 65.24 cents at 5pm yesterday. The trade-weighted index fell to 71.32 from 71.62 yesterday.

Commodity-linked currencies including the kiwi, Aussie and Canadian dollars fell after oil prices declined amid concerns weak global demand and ample supply will lower inflation and weigh on interest rates. The kiwi dipped after average prices at the GDT auction sank 7.4 percent with New Zealand's key product, whole milk powder, down 10.4 percent. The local currency then recovered some ground given the decline was close to the 5-to-10 percent range anticipated by NZX futures pricing.

"The risk-off setting shows up in foreign exchange movements, with the yen and the euro the strongest currencies and the commodity currencies amongst the weakest," Bank of New Zealand currency strategist Jason Wong said in a note.


"The New Zealand dollar dipped about 25 pips early this morning on the announcement of the latest GDT dairy auction showing an average price drop of 7.4 percent, and whole milk powder down 10.4 percent to US$1,952 per tonne. But the futures market was pointing to the possibility of a double-digit fall, so that result was no surprise and the New Zealand dollar soon recovered that loss."

Today, all eyes will be on Reserve Bank governor Graeme Wheeler's annual speech to the Canterbury Employers' Chamber of Commerce, titled 'The Global Economy, New Zealand's Economic Outlook, and the Policy Targets Agreement'. Wheeler last week opened the door for further interest rate cuts as a worldwide oil glut depresses petrol prices and looks set to keep inflation outside the bank's target band for longer than expected.

New Zealand's fourth-quarter labour market data and January vehicle registration details are also published today. In China, the Caixin gauge of the services sector is due for release.

See live rates for the NZ-US $ below. Click for more information:NzForex Foreign Exchange Transfers

The New Zealand dollar slid to 91.83 Australian cents from 91.98 cents yesterday after the Reserve Bank of Australia kept its benchmark interest rate on hold and was less pessimistic about the global outlook than some traders had expected. Today, Australia releases December building consents and trade data.

The kiwi dropped to 77.89 yen from 78.74 yen, and fell to 59.41 euro cents from 59.83 cents as traders favoured so-called safe haven assets.

The local currency declined to 44.97 British pence from 45.25 pence ahead of the Bank of England reviews policy and provides its latest forecasts for economic growth and inflation on Friday. It slid to 4.2694 yuan from 4.2919 yuan yesterday.