The New Zealand dollar dived against the greenback and yen after Federal Reserve chairman Ben Bernanke expressed concern about the United States economy, dampening investors' appetite for risk.Mr Bernanke, in testimony prepared for delivery to the Senate
The New Zealand dollar dived against the greenback and yen after Federal Reserve chairman Ben Bernanke expressed concern about the United States economy, dampening investors' appetite for risk.
Mr Bernanke, in testimony prepared for delivery to the Senate Banking Committee, said the US economy faces "unusually uncertain" prospects and that the central bank was ready to take further steps to bolster growth if needed.
For much of the time overnight the NZ dollar was confined to a relatively narrow band against the greenback between US71.55c and US71.95c.
But when Mr Bernanke made his comments about 6am (NZT), the kiwi fell from around US71.80c to US71.30c within about 10 minutes, and by 8am was at US71.35c. US shares also slid on the comments.
The NZ dollar also fell from around 62.65 yen to 61.95 yen at the time of Mr Bernanke's comments, and by 8am was at 62.11 yen, down from 62.39 at 5pm yesterday.
In its morning briefing notes, ANZ bank said it expected Mr Bernanke's remarks to continue to reverberate throughout today's trading session, with investors seeking to take shelter in safe havens for the time being.
Equity weakness off the back of the testimony should see NZ dollar support levels tested throughout the Asian session.
Mr Bernanke's comments pushed the euro down more than 1 percent versus both the US dollar and yen.
"Reaction is basically turning into a spasm of despair," said Brian Dolan, chief currency strategist at Forex.com in Bedminster, New Jersey. "In FX, the yen crosses are your real indicator of risk aversion."
The NZ dollar eased against the euro after Mr Bernanke's remarks but at 0.5589 euro around 8am was still ahead of the 0.5555 at 5pm yesterday.
The kiwi was little changed at A81.26c against the Australian dollar by the local open, with the trade weighted index also showing little movement, edging up to 67.34 at 8am from 67.31 at 5pm.
