The NZ dollar weakened against its major counterparts in the early European session on Friday, as the virus-led restrictions across Europe and the spread of the Omicron coronavirus dented investor sentiment.

The U.K. tightened rules to combat the spread of Omicron earlier this week.

U.K. Prime Minister Boris Johnson imposed tougher COVID restrictions in England, which includes requiring vaccine passports for large events and an order to work from home.

Investors reacted to Fitch downgrade on real estate developers China Evergrande and Kaisa Holdings to restricted default rating.

The downgrade came after property developers defaulted on interest payments on dollar bonds.

The latest survey from BusinessNZ showed that New Zealand manufacturing sector continued to expand in November, albeit at a much slower pace, with a manufacturing PMI score of 50.6.

That's down from 54.3 in October, although it remains above the boom-or-bust line of 50 that separates expansion from contraction.

The kiwi depreciated to a 2-day low of 0.6776 against the greenback and near a 2-month low of 1.0548 against the aussie, following its prior high of 0.6807 and a 2-day high of 1.0503, respectively. The next possible support for the kiwi is seen around 0.66 against the greenback and 1.075 against the aussie.

The kiwi pulled back from its previous high of 1.6599 against the euro, with the pair trading at 1.6654. On the downside, 1.68 is possibly seen as its next support level.

The kiwi retreated to 76.99 against the yen, from a high of 77.30 seen at 10:30 pm ET. If the kiwi falls further, 75.00 is possibly seen as its next support level.

Looking ahead, University of Michigan's preliminary consumer sentiment index for December, inflation data and monthly budget statement for November will be out in the New York session.

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