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Dollar holds gains as government awaited

NZ Newswire logoNZ Newswire 12/10/2017 Paul McBeth

<p>Pair charged with fraud over disappearing $1m</p> © Getty

Pair charged with fraud over disappearing $1m

The New Zealand dollar held on to earlier gains on Thursday as minutes to the last US Federal Reserve policy review raised questions about the pace of future interest rate hikes, and as the formation of the next government takes longer than signalled.

The kiwi traded at US71.04c at 5pm from 70.91c at 8am, up from 70.75c Wednesday.

Minutes to the Fed's September 19-20 meeting showed there were concerns about the pace of inflation in the world's biggest economy, which in turn raises questions about the central bank's pace for raising interest rates.

Investors are watching US data closely, with the consumer price index scheduled for release on Friday.

At home, NZ First won't make a decision on which party it will support to form the next government until Saturday at the earliest.

"The kiwi is a little bit stronger in our time zone, mainly on the back of the Fed minutes which were perceived as a little more dovish," said Phil Borkin, senior economist at ANZ Bank.

"Until we get a bit of clarity on the election with political direction, whether it's National- or Labour-led or something in between or something totally different, then markets are going to be sitting there waiting, and I certainly believe there will be reasonable reactions either way on the day."

Local data showed food prices rose 0.5 per cent in September due in part to higher butter prices, while separate surveys showed house sale volumes dropped by a more than a quarter nationwide and consumer confidence dipped from a three-year while remaining at elevated levels.

The kiwi traded at A90.86c from 90.90c Wednesday and increased to 4.6794 Chinese yuan from 4.6677 yuan. It decreased to 59.82 euro cents from 59.91c and traded at 53.59 British pence from 53.60 pence. It gained to 79.81 yen from 79.56 yen.

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