Kiwi falls as investors shun risk
The New Zealand dollar fell overnight on a wave of risk-off sentiment, and will remain on the back foot until the outcome of this weekend's Italian election, where the prospect of Silvio Berlusconi making a comeback has frayed investors' nerves.
The kiwi dollar recently traded at US83.20 cents, down from US83.41c at 5pm yesterday, while on the Trade Weighted Index of major trading partners' currencies it was unchanged at 76.20.
"There's a lot of factors why you'd be talking some risk-off at the moment," said ASB Institutional head of FX sales Tim Kelleher.
China drained a record amount of cash from its economy this week, a belt-tightening move which fed through to a strong sell-off in Asian equity markets. Wall Street also fell overnight.
Mixed messages from the US Federal Reserve about reducing its bond-buying stimulus programme lent some strength to the greenback.
Kelleher said the kiwi had broken through some strong levels of support and still looked heavy.
"Not unexpected, I would have thought, after the very strong runs in January and February."
He said the kiwi would remain on the back foot until the outcome of this weekend's election in Italy, where four-times prime minister Berlusconi may stage a comeback.
Several European politicians have warned Italian voters not to elect the divisive leader for fears that he will reignite the sovereign debt crisis.
On the crosses, the kiwi recently traded at 81.35 Australian cents, down slightly from A81.44c at 5pm yesterday, 63.14 euro cents, up from 62.87 euro cents, 54.59 pence down from 54.82p, and 77.41 yen, down from 77.95 yen.