The kiwi dollar fell to US0.7155 as at 8am in Wellington, from 72 cents late yesterday. The trade-weighted index slipped to 76 from 76.46.
US companies added 179,000 jobs last month, according to the ADP Research Institute, exceeding the 170,000 forecast and suggesting the official government figures due on Friday will show the US labour market is still growing at a healthy clip, one of the requirements for a Federal Reserve interest rate hike. By contrast, traders expect the Reserve Bank to cut the official cash rate a quarter point to 2% on August 11 and signal it is still in easing mode, reducing the yield premium on offer in the kiwi.
"While it’s debatable how good an indicator of wider labour conditions this survey is, some will nudge their payrolls forecasts higher," Imre Speizer, senior market strategist at Westpac, said. "The uncertainty generated by Brexit plus further RBNZ easing should be negative for the NZD, although partly offset by a weaker US dollar near term," he said, adding he expected the kiwi to fall to 69 US cents.
Traders are putting 96% odds on RBNZ governor Graeme Wheeler cutting the official cash rate next week after its latest survey showed expectations for low inflation were becoming entrenched. A decline in the price of crude oil in recent months, even though it gained overnight, means fuel prices will again be among deflationary forces in the local economy, while a trade-weighted index is still well above the central bank's assumed path, meaning there's little inflation in imported prices.
The kiwi fell to 72.43 yen from 73.58 yen yesterday and slipped to €0.6417 from 0.6425 yesterday. It fell to £0.5371 ahead of the Bank of England's policy review tonight, amid expectations of a rate cut and further stimulus measures, from 0.544. It fell to 4.7445 Chinese yuan from 4.7893 yuan yesterday.
