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Kiwi in tight range ahead of Trump speech

NZ Newswire logoNZ Newswire 27/02/2017 Jonathan Underhill

The New Zealand dollar remained in a tight trading range as financial markets await a key policy address by US President Donald Trump and a speech by Federal Reserve chair Janet Yellen at the end of the week.

Locally, trade data and a business confidence survey may underline the strength of the NZ economy.

The kiwi traded at US71.97 cents as at 8am on Tuesday in Wellington, from US71.94c late Monday. The trade-weighted index was at 78.29 compared with 78.24.

The New Zealand dollar has been confined to a range of about US71.27c to US72.46c for almost three weeks, with markets waiting for details of Mr Trump's policy plans while weighing the chances that the Fed will hike rates as soon as next month.

Mr Trump will use a speech on Tuesday to outline tax cuts for companies and the middle class, a move that would be seen as a boost to the US economy.

"Trump has said that he will talk about his budget so the markets will be expecting greater granularity than has so far been forthcoming," said ANZ senior rates strategist David Croy.

"With no sound reason to be strategically long or short, the NZD continues to range trade and is unlikely to stray too far until Fed chair Yellen's speech on Friday night."

Mr Croy said New Zealand economic data this week was "likely to emphasise the story of an economy that is doing very well".

New Zealand's merchandise trade deficit is expected to have narrowed to $3 million in January from $41m a month earlier.

On Tuesday morning, the kiwi traded at 57.82 British pence from 57.89p late Monday. It rose to 93.69 Australian cents from A93.55c and slipped to 67.94 euro cents from 68.10c. The kiwi rose to 81.11 yen from 80.71 yen and fell to 4.9377 yuan from 4.9468 yuan.

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