NZ dollar slides as traders buy back US dollar after Fed

The New Zealand dollar slid along with other major currencies against the US dollar, as investors bought back the greenback after selling it following a more cautious outlook from the Federal Reserve.

The kiwi fell to 73.80 US cents at 8am in Wellington, from 74.62 cents at 5pm yesterday. The trade-weighted index declined to 77.88 from 78.23 yesterday.

The US dollar index, which measures the greenback against a basket of currencies, dropped significantly yesterday after the Federal Reserve Open Market Committee signalled a more gradual path to interest rate rises, but has now returned to the level it was trading at prior to the Fed's statement. The rebound in the greenback has pushed down all other major currencies against it, particularly the euro as traders are concerned about the outlook for the Greek economy.

"Major currencies, having gained hard against the US dollar yesterday morning, are now effectively back to the levels prevailing before the FOMC meeting," Raiko Shareef, currency strategist at Bank of New Zealand, said in a note. "The New Zealand dollar participated in last night's reversal, but its fall was relatively modest."

In New Zealand today, migration data for February is scheduled for release at 10:45am, while the ANZ-Roy Morgan consumer confidence survey is published at 1pm. The Reserve Bank publishes credit card balance data for February at 3pm.

The kiwi advanced to 96.81 Australian cents from 96.42 cents yesterday. The New Zealand dollar touched 96.93 Australian cents this morning, and the BNZ's Shareef says it looks to be making another run at 97 cents. Earlier this month the kiwi touched a post-float high of 97.21 Australian cents, reflecting a divergent outlook for the two economies as the Reserve Bank of Australia cuts interest rates to record lows while New Zealand's central bank remains on hold.

"We'd be unsurprised to see further fresh highs in the cross, as speculation grows for a further RBA rate cut in April," Shareef said.

Today, RBA governor Glenn Stevens is scheduled to speak at the American Chamber of Commerce in Australia luncheon in Melbourne.

The New Zealand dollar rose to 69.35 euro cents from 69.27 cents yesterday, was little changed at 50.13 British pence from 50.11 pence, and fell to 89.25 yen from 89.84 yen.