The New Zealand dollar touched a three-week low today in subdued holiday trading as the greenback strengthens following better than expected US labour market data.
The kiwi touched a low of 81.45 US cents earlier today, and was trading at 81.59 US cents at 5pm in Wellington, little changed from 81.52 cents at 8am this morning, but down from 82.02 cents at the start of the week.
The US dollar advanced against commodity currencies like the kiwi and Aussie after a report yesterday showed the number of Americans filing new claims for unemployment benefits fell last week to the lowest level in nearly a month. An improving US economy has prompted the Federal Reserve to start reducing its monetary stimulus programme from next month, underpinning the greenback.
"There is a bit of US dollar strength pushing some of the crosses down to the bottom of their range," said Alex Hill, head of dealing at HiFX. "It's a fairly illiquid market with not much going on."
The kiwi is likely to trade in a narrow range between 81.20 US cents and 82.20 cents over the next few days heading into the end of the year, Hill said.
Most financial centres in Europe and the Americas were closed for Christmas on Wednesday with many also shut yesterday for Boxing Day.
The New Zealand dollar edged lower to 91.78 Australian cents at 2pm in Wellington, from 91.73 cents this morning and down from 91.89 cents at the start of the week on the expectation the kiwi's 15 percent gain against the Aussie this year has priced in the difference between a revival in New Zealand's economic fortunes against a slowdown in Australia.
The local currency touched a four-day high of 85.72 yen, and was at 85.50 yen from 85.37 yen this morning and 85.31 yen at the start of the week. A report today showed Japan's annual consumer price inflation hit a new five-year high of 1.2 percent in November, edging towards the central bank's target set in April of reaching 2 percent in about two years.
The kiwi was little changed at 49.60 British pence from 49.65 pence this morning, although lower than 50.20 pence at the start of the week. Sterling has advanced this week after data on Tuesday showed British lenders wrote mortgages for home buyers at the fastest pace in almost four years, bolstering expectations the Bank of England may have to raise interest rates sooner than expected to head off a bubble in the housing market.
The local currency weakened to 59.49 euro cents from 59.53 cents this morning and 59.98 cents at the start of the week. The trade weighted index was at 77.15.