The New Zealand dollar traded back up above 81 US cents after falling overnight amid concern about the American fiscal cliff and a flare-up in tensions between Israel and the Palestinians.
The kiwi traded at 81.22 US cents, little changed from the start of the day, and up from as low as 80.86 cents overnight. The trade-weighted index was at 72.75 from 72.77.
US President Barack Obama is trying to build support for a way through the so-called fiscal cliff ahead of a November 16 meeting with congressional leaders.
If Congress does not act by the end of the year, some $US607 billion in spending cuts and tax increases take effect in January, threatening US economic growth.
Meanwhile, Israeli jets struck the Gaza Strip in retaliation for rocket attacks into Israel.
"There's a bit of negative sentiment weighing on the kiwi," says Dan Bell, currency strategist at HiFX. The currency "found support around the 80.80 mark" helping push it back over 81 cents.
The overnight decline was exacerbated by falling stocks on Wall Street, which added to the risk-off tone in currency markets.
"Equity markets in the US are looking quite vulnerable to more downside," Mr Bell says.
The New Zealand dollar has fallen from as high as 82.79 US cents at the start of the month as a run of data pointing to a weaker domestic economy had traders lifting bets on a rate cut by the Reserve Bank.
Third-quarter gross domestic product is due out just before Christmas, though already the jobless rate has climbed back to 7.3% and retail shrank in the third quarter.
Today, surveys showed consumer confidence improved in November, while the Performance of Manufacturing Index rose to 50.5, returning to a level that indicates expansion.
The kiwi slipped to 64.99 yen from 65.06 yen at the start of the day and rose to 78.11 Australian cents from 78.03 cents. It gained to 63.63 euro cents from 63.54 cents and was little changed at 51.14 British pence.
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