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Kiwi little changed ahead of Xmas slowdown

NZ Newswire logoNZ Newswire 22/12/2016 Paul McBeth

The New Zealand dollar was little changed as a mixed US data in light pre-Christmas trading failed to dent the greenback's momentum, which is riding a wave of demand built up by the prospect of rising US interest rates.

The kiwi traded at US68.95 cents as at 8am on Friday from US69.07c on Thursday, and the trade-weighted index was at 77.05 from 77.

US data showed the world's biggest economy grew at a faster pace than previously estimated in the third quarter, expanding 3.5 per cent, while other figures reported consumer spending was weaker than expected.

That failed to deter demand for the greenback, which has been bolstered by US President-elect Donald Trump's expansionary fiscal policies and the Federal Reserve signalling a more aggressive rate hike plan next year, which has driven up yields on US Treasuries.

"On a normal day, this might have seen the USD retreat and US Treasuries rally, as it questions the extent of Fed tightening required next year, but in pre-Christmas trading conditions the US yield curve has barely budged," BNZ currency strategist Jason Wong said in a note.

"The NZD is finding good support around the 0.69 mark and is within a few pips of where it sat this time yesterday morning."

The US dollar's momentum has dominated trading this week ahead of the Christmas and New Year slowdown, overshadowing local data on Thursday which showed New Zealand's economy grew 3.5 per cent in the September quarter from a year earlier as the country's building and tourism booms stoke activity.

On Friday morning the local currency rose to 95.67 Australian cents from A95.25c and slipped to 4.7874 Chinese yuan from 4.7973 yuan. It was little changed at 81.09 yen from 81.11 yen and traded at 66.04 euro cents from 66.12c. The kiwi increased to 56.06 British pence from 55.82p.

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