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Kiwi falls as markets see Trump settling

NZ Newswire logoNZ Newswire 13/02/2017 Jonathan Underhill

The New Zealand dollar has fallen as the greenback reached a three-week high ahead of Federal Reserve chair Janet Yellen's Senate testimony and optimism about the Trump administration's recent foreign policy efforts and tax cut plans.

The kiwi declined to US71.77 cents as at 8am on Tuesday in Wellington from US72 cents late on Monday. The trade-weighted index fell to 78.26 from 78.51.

Yellen is scheduled to appear before the Senate Banking Committee on Tuesday about 4am (NZT) and there is market speculation she will reiterate the Fed's view that there could be three interest rate hikes this year, starting as soon as next month.

Meanwhile, markets are awaiting an announcement from US President Donald Trump on potential tax cuts after he dropped hints last week. And reports of more constructive talks with China and Japan has soothed concerns about deteriorating US foreign policy.

"The dollar may be benefiting as market sentiment towards the Trump administration seems to be more settled in recent days," said ANZ senior economist Sharon Zollner.

"That follows reaffirmation of support for the One China Policy, a positive summit with Japan's PM Abe, and expectations of details on Trump's tax initiatives later this month."

Tuesday is a relatively quiet day for domestic data. The Real Estate Institute is due to release house sales figures for January and January's food price index for January is released.

Further afield, China releases January inflation figures and Australia has its business conditions index, also for January.

In the morning, the kiwi fell to 81.55 yen from 82.02 yen on Monday. It declined to 57.27 British pence from 57.63p and fell to 67.69 euro cents from 67.80c. The kiwi slipped to 4.9354 yuan from 4.9551 yuan and traded at 93.82 Australian cents from A93.92c.

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