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Kiwi down as US confidence rises

NZ Newswire logoNZ Newswire 28/03/2017 Jonathan Underhill

The New Zealand dollar has fallen after a measure of US consumer confidence jumped to its highest level in almost two decades, signalling a pick up in the world's biggest economy.

The kiwi dropped to US70.08 cents as at 8am on Wednesday in Wellington from US70.40c late Tuesday. The trade-weighted index declined to 75.99 from 76.21.

The US Conference Board's consumer confidence index rose 9.5 points to 125.6 in March, the highest reading since December 2000, and Americans became more optimistic about both business conditions and the labour market.

The survey may signal a pick up in the US economy, which had appeared to stumble in January, and comes after President Donald Trump signed an executive order to unwind the previous administration's climate change strategy, removing regulations imposed on oil and coal mining companies.

"Even if consumers are a bit disappointed by the very latest political developments, there is plenty in this result to suggest that the US unemployment rate will track lower and spending higher," said BNZ economist Doug Steel.

Also helping the greenback, Speaker of the US House of Representatives Paul Ryan said Republicans were united in their support for tax cuts, a signal that Mr Trump's plans to reform tax and allow companies to pay less tax won't suffer the same fate as his failed attempt to reform Obamacare.

There is no local economic data of note scheduled for Wednesday. Statistics New Zealand is due to release research and development activity and expenditure, a two-yearly survey.

On Wednesday morning the kiwi fell to 4.8187 yuan from 4.8451 yuan. It rose to 56.29 British pence from 56.02p, fell to 91.81 Australian cents from A92.39c and traded at 77.88 yen from 77.86 yen. It was little changed at 68.80 euro cents.

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