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Kiwi slips on US rate hike talk

NZ Newswire logoNZ Newswire 7/02/2017 Paul McBeth

© Getty Images The New Zealand dollar has slipped as Federal Reserve Philadelphia president Patrick Harker talked up the chances for an interest rate hike next month, stoking demand for the greenback.

The kiwi fell to US73.17 cents as at 8am on Wednesday in Wellington, from US73.38c on Tuesday. The trade-weighted index declined to 79.64 from 80.

The US dollar index, a measure of the greenback against a basket of currencies, rose 0.3 per cent after Dr Harker told reporters he backed three rate hikes this year and said the Federal Open Market Committee's March meeting could see an increase in the federal funds rate.

That shared a sentiment voiced by San Francisco Fed president John Williams last week, who also called for three hikes this year.

"The Fed's Harker signalled that the March meeting remains live for a possible rate increase, echoing the Fed's William's comments on Friday," BNZ currency strategist Jason Wong said in a note.

"That move was unwound last night, and some, before the combination of a USD turnaround and a pleasing GDT dairy auction (up 1.3 per cent) saw the NZD recover a little."

On Wednesday morning, the kiwi traded at 95.80 Australian cents from A95.93c on Tuesday.

The local currency fell to 58.42 British pence from 59.02p after Bank of England monetary policy committee member Kristin Forbes said she was growing uncomfortable with the bank's policy stance as inflation accelerated more than expected.

The kiwi slipped to 68.38 euro cents from 68.72c, fell to 81.97 yen from 82.33 yen and declined to 5.0356 Chinese yuan from 5.0586 yuan.

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