THE New Zealand dollar weakened as investors bet retail sales growth in the US suggests a revival in the world's largest economy which will prompt the Federal Reserve to start tapering its monetary stimulus next month.
The kiwi slipped to 79.64 US cents at 8am in Wellington, from 79.97 cents at the 5pm market close on Tuesday. The trade-weighted index dipped to 75.15 from 75.21.
The US dollar index, which measures the greenback against a basket of other currencies, jumped after a report showed US retail sales rose in July for a fourth month.
Investors are betting positive economic data will prompt the Fed at its next meeting in September to reduce its quantitative easing programme which has debased the US currency.
"There was broad US dollar strength," said Martin Rudings, a senior advisor at OM Financial. "The market is now perceiving that the tapering of the US QE will start in September and the case is getting stronger as we go through more data,"
In New Zealand, traders will be eyeing a report expected to show second quarter retail sales rose 1.3 per cent.
The kiwi could slide down below 70 US cents by the end of the year should tapering start in September, Mr Rudings said.
The New Zealand dollar weakened to 87.36 Australian cents at 8am in Wellington from 87.47, it dropped to 51.51 British pence from 51.68, was little changed at 60 euro cents and advanced to 78.10 yen from 77.78 yen.
