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Kiwi falls on more US rate hike talk

NZ Newswire logoNZ Newswire 1/03/2017 Jonathan Underhill

The New Zealand dollar has fallen after New York Federal Reserve President William Dudley talked up the prospects for US interest rate hikes.

The New Zealand dollar fell to US71.39 cents as at 8am on Thursday in Wellington from US71.45c late on Wednesday and US72.17c earlier.

The trade-weighted index was at 77.91 from 77.90.

The Fed's Mr Dudley told CNN that the case for raising interest rates "has become a lot more compelling" given Donald Trump's election as president and a Republican-controlled Congress.

He said a rate hike would be "on the table for serious consideration" at the Fed's March meeting.

The comments from the Fed officials helped lift the greenback after Mr Trump's speech to the Joint Session of Congress, while presidential rather than heckling, failed to deliver the hoped-for policy details.

"The comments helped boost the USD and significantly increased the probability of a rate hike later this month," said BNZ currency strategist Jason Wong.

"It took the probability of a March rate hike based on Fed Fund futures above the 50 per cent mark for the first time. Our calculations suggest that the probability is now around the 70 per cent mark."

Locally on Thursday, traders are awaiting a speech by Reserve Bank governor Graeme Wheeler, which comes after economic data showed the foundations of sturdy economic growth such as strong migration remain in place.

On Thursday morning, the kiwi fell to 93 Australian cents from A93.23c on Wednesday when figures showed Australia's economy grew 1.1 per cent in the three months through December, beating economists forecasts.

The kiwi rose to 58.09 British pence from 57.77p and traded at 67.33 euro cents from 67.77c. It rose to 81.20 yen from 81.02 yen and was at 4.9146 yuan from 4.9143.

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