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Kiwi falls as US economy gets boost

NZ NewswireNZ Newswire 15/11/2016 Jonathan Underhill

The New Zealand dollar has fallen as stronger-than-expected US retail sales and manufacturing data helped extend the greenback's rally.

The local currency fell to US70.79 cents as at 8am on Wednesday in Wellington, from US71.11c late on Tuesday. The trade-weighted index fell to 77.27 from 77.47.

US retail sales rose 0.8 per cent in October, the Commerce Department said, faster than the 0.6 per cent pace expected by economists, while the Empire manufacturing index rose against expectations of a decline.

The figures added to the market's conviction that the US Federal Reserve will hike interest rates next month.

In a night of mixed influences on the kiwi, dairy product prices rose at the GlobalDairyTrade auction, gaining for the seventh time in eight auctions, amid supply decreases, while crude oil led gains in other commodity prices and equity markets gained in Europe and the US.

"Strong retail sales add to other evidence that the US economy is in good health," advisers at Bancorp Treasury Services said in a report.

"These positives justify the Fed withdrawing its easy monetary policy stance."

The GDT price index increased 4.5 per cent to $US3519 at the dairy auction overnight, while whole milk powder rose 3.2 per cent to $US3423 a tonne.

The gain in whole milk powder "was a little disappointing but let's not forget it jumped 20 per cent last time," said OMF's Nigel Brunel.

On Wednesday morning, the kiwi dollar fell to 93.87 Australian cents from A94.05c late Tuesday and rose to 77.34 yen from 76.88 yen. It fell to 4.8586 yuan from 4.8769 yuan, declined to 56.76 British pence from 56.91p and traded at 66.06 euro cents from 66.12c.

New Zealand's two-year swaps rose 4 basis points to 2.26 per cent while the 10-year swap rate was unchanged at 3.24 per cent.

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