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Kiwi fails to move on US weakness

NZ Newswire logoNZ Newswire 27/03/2017 Jonathan Underhill

The New Zealand dollar was little changed, having reached the highest in almost a week, as a decline in commodity prices and equities offset the effects of waning sentiment for the US dollar.

The kiwi traded at US70.43 cents as at 8am on Tuesday in Wellington, having touched US70.67c overnight, from US70.45c late Monday. The trade-weighted index was little changed at 76.21 from 76.26.

The US dollar fell to a four-month low against a basket of currencies overnight on concern that US President Donald Trump's failure to enact healthcare reform bodes poorly for other policy pledges likely to stimulate the US economy.

While the greenback fell against the euro and the yen its weakness failed to lift growth-linked currencies such as the kiwi and the Aussie dollar as the CRB Index of 19 commonly traded commodities fell to a two-week low and stocks on Wall Street slipped.

"Commodity prices all got hit overnight - that's why we've underperformed," said ASB's Tim Kelleher.

"We still expect Fed rate hikes down the line. Once the interest rate differential narrows that will weigh on the kiwi. It will be a case of sell on rallies."

On Tuesday morning, the kiwi traded at 4.8369 yuan from 4.8407 yuan late Monday, when it was helped by agreements announced between New Zealand and China during the state visit of Premier Li Keqiang, including a date for talks on upgrading the free-trade agreement and trial shipments of New Zealand chilled meat, the first such exports to the world's second-largest economy.

The kiwi fell to 56.04 British pence from 56.23p and was little changed at 92.35 Australian cents from A92.34c. It rose to 77.92 yen from 77.73 yen and traded at 64.83 euro cents from 64.94c.

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