NZ dollar down after China cuts
By Jonathan Underhill
The New Zealand dollar extended its decline after China cut its yuan fixing against the US dollar by the most since its devaluation last August, sending the greenback broadly higher.
The kiwi fell to 68.85 US cents as at 5pm in Wellington, from 69.81 cents late on Tuesday. The local currency fell to 4.4743 yuan from 4.5172 yuan.
The People's Bank of China set the value of the yuan at 6.4943 per US dollar, down about 0.6 percent from Tuesday's fixing, according to data from the Foreign Exchange Trade System.
The US dollar index rose to 93.153, the highest level this week.
Traders are speculating about the timing of further interest rate hikes by the US Federal Reserve and will be watching the private ADP employment survey overnight ahead of the key US non-farm payrolls release on Friday for clues to the pace of US economic growth.
"A very good number on Friday night would see US markets pricing in another hike sooner rather than later," said NZ Forex's Nick Tvedt.
He said the kiwi has to go lower given expectations for at least two rate hikes by the Fed this year and a local central bank is looking to cut rates.
Still, the New Zealand dollar's decline is likely to be a bumpy road, he said.
The kiwi briefly gained after employment figures for the first quarter suggested the labour market was in reasonable health, with a 1.2 percent gain in employment outpacing growth in the total working-age population. The jobless rate rose to 5.7 percent from 5.4 percent.
"The headline (unemployment) number was worse but everything else was pretty solid," Mr Tvedt said.
The New Zealand dollar fell to 91.83 Australian cents from 92.26 cents after it had jumped to as high as 92.94 cents after the Reserve Bank of Australia cut its cash rate to 1.75 percent.
Sentiment against the kiwi was further hurt by a softer GlobalDairyTrade auction overnight, with the GDT price index falling 1.4 percent, compared with expectations for a gain.
The New Zealand dollar fell to 59.95 euro cents from 60.49 cents and was little changed at 73.87 yen. It fell to 47.37 British pence from 47.54 pence. The trade-weighted index dropped to 72.89 from 73.40.