The New Zealand dollar retreated from a 16-month high as some traders deemed it had risen too far, too fast, and after the European Central Bank disappointed the market by not flagging any additional easing measures.

The kiwi dropped to 73.91 US cents as at 8am in Wellington, from 74.57 cents late yesterday. The currency fell to 65.67 euro cents from 66.30 cents.

The kiwi had gained almost 2 per cent in the past week on a trade-weighted basis as relatively robust economic data and gains in prices of dairy products and other commodities lifted sentiment for the currency in the face of weak data in the US and elsewhere.

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It fell against the euro after ECB president President Draghi was more upbeat that expected in the bank's review of monetary policy and failed to make mention of any extra stimulus plans.


"The kiwi has just run out of puff - it's had a few days of phenomenal strength," said Philip Borkin, senior economist at ANZ Bank New Zealand.

"We don't think really much has changed in the reasons the New Zealand dollar was strong to begin with - the data is great, growth looks good and there's a lack of desire to push the US dollar much higher."

Borkin said the ECB "arguably disappointed by not doing anything".

The trade-weighted index fell to 78.33 from 78.84 late yesterday, to remain above the average 76 level the Reserve Bank has projected for the third quarter.

The kiwi slid to 96.68 Australian cents from 97.12 cents and declined to 55.58 British pence from 55.88 pence. It traded at 75.74 yen from 75.73 yen and fell to 4.9260 yuan from 4.9721 yuan.