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Kiwi ends week down 1.7pc, all eyes on Fed

NZ Newswire logoNZ Newswire 10/03/2017 Rebecca Howard

The New Zealand dollar remained out of favour on Friday, falling 1.7 per cent on the week against the greenback as markets gear up for a rate increase from the U.S. Federal Reserve.

The kiwi dollar was trading at US69.10c as at 5pm versus 69c late Thursday and 70.30 early Monday. It also eased 1.3 per cent on a trade-weighed index basis over the week and was trading at 75.94.

"The kiwi has held about that US68.90c level, helped by some exporter buying," said Tim Kelleher, head of institutional foreign exchange sales for ASB Bank.

Domestic data was largely overlooked with markets waiting for US jobs data later in the global trading day with investors expecting an addition of 200,000 non-farm payrolls.

If that data is as expected or better and the Federal Reserve is "reasonably hawkish" at its rate review next week, the Kiwi might fall further.

However, given that the market is widely expecting a Fed rate increase next week and at least two more hikes this year, the kiwi is unlikely to plunge.

Mr Kelleher noted the kiwi has traded in a US68.50c to 73.50c range for the past six months and said it is unlikely to break out of it just yet.

Mr Kelleher underscored the only story right now is the US dollar story.

Even the euro failed to really fire after ECB President Mario Draghi said further measures to support the Eurozone's economic recovery and boost inflation are becoming less likely.

The kiwi was trading at A91.91c versus 91.86c and at 4.7740 Chinese yuan from 4.7758 yuan on Thursday. It was at 56.81 British pence from 56.75 pence yesterday and was at 79.58 yen versus 79.02 yen.

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