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Kiwi pares Fed gains after GDP softens

NZ Newswire logoNZ Newswire 16/03/2017 Rebecca Howard

The New Zealand dollar pared some of its gains after the US Federal Reserve lifted rates but kept the track for further hikes unchanged after the domestic growth picture was softer than expected.

The kiwi dollar was trading at US69.91 cents as at 5pm in Wellington versus 70.24c as at 8am.

The US dollar took a tumble when the Fed kept to its projection for two more increases this year.

"The market got the rate hike but not the icing on the cake, which would have been an additional dot plot for this year and that's what the noise has been about today," said OMF private client advisor Stuart Ive.

The kiwi dollar shot up about US1c but then fell back when the domestic fourth quarter gross domestic product data was weaker-than-expected.

The GDP expanded 0.4 per cent in the three months ended December 31, following a revised 0.8 per cent increase in the September quarter, Statistics New Zealand said.

Economists had been expecting growth of 0.75 per cent while the central bank tipped growth of 1.0 per cent on quarter.

"Following today's data we remain comfortable with our view that there is no rush to raise the OCR anytime soon," said Kiwibank chief economist Zoe Wallis.

Mr Ive said the kiwi dollar then bounced back up when Australia's unemployment rate rose to a higher-than-expected 5.9 per cent in February from 5.7 per cent in January, although has faded.

The Kiwi was trading at A91.03c from 91.56c late Wednesday.

The kiwi dollar was at 65.19 euro cents from 65.29 cents and 56.99 British pence from 57.02 pence. It traded at 4.8206 yuan from 4.7931 yuan and at 79.28 yen from 79.60 yen.

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