NZ Dollar Falls After New Zealand PM John Key's Comments

The NZ dollar weakened against the other major currencies in the Asian session on Monday, as the nation's Prime Minister John Key said he agreed with the Reserve Bank of New Zealand's view that the currency is over-valued.

In a post-Cabinet media conference, Key said "I would agree with the governor that the New Zealand dollar is overvalued if you compared it against a reduction in commodity prices."

Regarding RBNZ intervention, Key opined that "If they choose to do that they have a mandate under which to intervene."

Traders await Fonterra Cooperative Group's milk price forecast for 2014/15 on tomorrow and RBNZ currency intervention statistics on Wednesday. Economists expect the Fonterra Cooperative Group to revise down its milk price payout from its initial estimate.

The NZ dollar fell to a 1-1/2-month of 0.8532 against the U.S. dollar, from an early high of 0.8557. At last week's close, the kiwi was trading at 0.8544 against the greenback. If the kiwi extends its downtrend, it is likely to find support around the 0.84 area.

Pulling away from an early high of 87.10 against the yen, the kiwi slipped to nearly a 2-month low of 86.87. The kiwi may test support near the 86.26 area.

Against the Australian dollar and the euro, the kiwi dropped to 1.1000 and 1.5735 from early highs of 0.0972 and 1.5690, respectively. Continuation of bearish trend may lead the kiwi to a support around 1.11 against the aussie and 1.58 against the euro.

Looking ahead, U.S. Markit's purchasing manager's index for July and pending home sales for June are due in the New York session.