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Kiwi lifts on Fed concerns about greenback

NZ Newswire logoNZ Newswire 22/02/2017 Jonathan Underhill

The New Zealand dollar has risen after minutes of the US Federal Reserve's latest meeting showed concern that a strong greenback could hurt the US economy.

The kiwi rose to US71.79 cents as at 8am on Thursday in Wellington from US71.64c late on Wednesday. The trade-weighted index edged up to 78.15 from 78.07.

Minutes of the Federal Open Market Committee's latest meeting showed officials saw the need to raise interest rates "fairly soon" provided labour market data and inflation were in line or stronger than expectations or there was a risk of overshoot.

The tone of the minutes was somewhat more dovish than some market participants had expected, especially given recent comments from chair Janet Yellen and other Fed officials that indicated a rate hike in March was possible.

"US data is likely to provide most of the swings in the near term but the underlying story of an outperforming, stable New Zealand economy continues to support the currency," ANZ senior economist Sharon Zollner said in a note before the release of the minutes at 8am Wellington time.

The kiwi actually extended its gains after following an announcement from Fonterra that it was maintaining its milk payout forecast at $6 per kilogram of milk solids. Some forecasters had been expecting an increase.

In the morning, the kiwi traded at 93.22 Australian cents from A93.14c. It rose to 57.64 British pence from 57.33p and traded at 68 euro cents from 67.94c. The kiwi fell to 81.20 yen from 81.29 yen and rose to 4.9421 yuan from 4.9295 yuan.

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