The New Zealand dollar fell below 69 US cents and dropped against the yen as Italy's political hiatus sent Italian bond yields soaring and prompted investors to look for safe havens.
The kiwi dollar dropped to 68.99 US cents as at 8am in Wellington from 69.33 cents late yesterday. It fell to 74.99 yen from 75.61 yen yesterday.
The yield on Italian 2-year bonds soared 180 basis points due to ongoing political turmoil in Italy, in particular, concerns about what a new round of Italian elections might bring including stronger calls to exit the eurozone. In New Zealand, the Reserve Bank's financial stability report is due out at 9am and traders will be watching for any comment related to the kiwi dollar.
"The NZD/USD unsurprisingly suffered from the risk-off tone permeating through markets," said Miles Workman, an economist at ANZ Bank New Zealand, in a note.
In other developments overnight, the US said it will impose tariffs of 25 percent on some US$50 billion of imports from China and impose restrictions on Chinese investment in the US.
The trade-weighted index fell to 72.70 from 72.91.
Also out today are building permits for April for New Zealand and Australia and Japanese retail sales for April.
The kiwi fell to 91.90 Australian cents from 92 cents and traded at 4.4259 yuan from 4.4452 yuan. It traded at 52.03 British pence from 52.05 pence.