In a bout of risk aversion, the NZD/USD has fallen to its lowest levels since June 21.
Data from the United States reveals flaws in the country’s economic recovery.
As high-beta currencies take a knock, the NZD/USD is trading at 0.6944 in early Asia, down over 1% on the day.
The currency slid from a high of 0.7019 to a low of 0.6934, weighed down by a worldwide risk appetite easing.
On Thursday, Wall Street finished lower, retreating from record closing highs in a broad sell-off fueled by concerns over the pace of the US economic recovery.
On Thursday, new data revealed fractures in the US economy’s recovery. As a result, speculators covering short positions in the bond market sold the US dollar.
When the number of US workers filing first-time applications for unemployment benefits unexpectedly increased to 373,000 last week, the yield on the benchmark 10-year US Treasury note fell for the eighth consecutive session.
This indicates that the labor market recovery in the United States is still fragile.
The changes were mostly restricted to the commodity currencies, particularly the AUD and NZD, while the bond market surged on a flight to safety, with US bond rates plunging to 5-month lows overnight.
“If the risk-off mentality persists, additional depreciation is likely, but US stocks and bond yields have already recovered from recent lows, and we believe the NZD will eventually find support from cyclical economic momentum and early OCR hikes,” according to ANZ Bank analysts./n
