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Kiwi edges down on stronger greenback

NZ Newswire logoNZ Newswire 3/01/2017 Paul McBeth

The New Zealand dollar has edged lower, remaining in recent ranges, as the greenback's ascendancy stays intact with the prospect of large infrastructure spending and a strong economy in the United States.

The kiwi slipped to US69.21 cents as at 8am on Wednesday in Wellington from US69.46c on Tuesday, and US69.33c on Friday in New York. The trade-weighted index dipped to 77.39 from 77.52 last week.

The US dollar index, a measure of the greenback against a basket of currencies, remained near 14-year highs in thinly traded markets in the opening to 2017 as the latest US data pointed to a healthy US economy.

With US president-elect Donald Trump promising tax reform and infrastructure spending, the US Federal Reserve has indicated a more aggressive track of rate hikes in the year ahead, lifting yields on bonds and stoking demand for the greenback.

"The US dollar is still in its uptrend, and as long as that remains so, the kiwi will be range-bound or lower," said Westpac's Imre Speizer.

"The year ahead does look pretty good for the US dollar."

Prices fell at the latest GlobalDairyTrade auction, with New Zealand's key export product - whole milk powder - falling 7.7 per cent to $US3294 a tonne. Fonterra boosted supply at the event, though the decline was bigger than what New Zealand's futures market priced in before trading closed for the New Year holiday.

On Wednesday morning, the kiwi fell to 95.79 Australian cents from A96.23c on Tuesday and declined to 81.45 yen from 81.63 yen. It was little changed at 66.56 euro cents from 66.42c and almost unchanged at 56.55 British pence from 56.56p. It fell to 4.8167 Chinese yuan from 4.8377 yuan.

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