The New Zealand dollar fell, reaching an 18-month low on a trade-weighted basis, as traders keep watch on emerging details of the new coalition government's fiscal policies.
The kiwi dropped to 68.68 US cents as at 8am in Wellington from 68.88 cents late yesterday. The trade-weighted index fell to 72.77, and earlier touched 72.65, the lowest since late May 2016, from 72.98 yesterday.
Traders are keeping a close watch for policy details from the incoming government, which has granted ministerial positions to Labour, NZ First and Green Party MPs. Yesterday Prime Minister-elect Jacinda Arden cited 4 per cent as a target for unemployment and incoming transport minister Phil Twyford said a fuel tax for Auckland was looming, while the Greens have flagged moves on pay equity. The TWI has dropped almost 7 per cent since the September 23 election.
"The bias in kiwi still looks lower (sentiment is weak) and major support levels are approaching, which if broken, could see more significant moves south," said Philip Borkin, senior economist at ANZ Bank New Zealand. "However, some caution is necessary given the pace of the move seen. Unease around domestic policy direction continues to weigh."
The kiwi traded at 89.23 Australian cents from 89.21 cents yesterday, when it rose against the Aussie following weaker-than-expected Australian consumer prices data.
In New Zealand, the trade balance for September is due out this morning and is expected to show the deficit narrowed to about $900 million from $1.2 billion.
The kiwi fell to 4.5569 yuan from 4.5754 yuan late yesterday. It declined to 58.16 euro cents from 58.59 cents and decreased to 51.82 British pence from 52.44 pence. The kiwi dropped to 78.09 yen from 78.48 yen yesterday.