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Kiwi steady despite positive US news

NZ Newswire logoNZ Newswire 16/02/2017 Paul McBeth

The New Zealand dollar was little changed and may test new multi-month highs against the greenback as optimism about US President Donald Trump's economic policies starts to wane.

The kiwi was little changed at US72.29 cents as at 8am on Friday in Wellington from US72.25c on Thursday. The trade-weighted was at 78.58 from 78.55.

Stocks on Wall Street fell from record highs and the US dollar index declined as investors pared their excitement over what Mr Trump's "phenomenal" but as yet undetermined tax policies may deliver.

US economic data continues to show robust growth, and if Mr Trump's policies inject stimulus into the economy, that would warrant a sharper response from the Federal Reserve, which is poised to raise interest rates again.

"US interest rates, the US dollar, and equities are all slightly lower despite another round of strong US economic data," Westpac market strategist Imre Speizer said in a note.

"The month ahead could see NZD/USD extending beyond 75 US cents (the September high) if the US dollar continues to register disappointment in the Trump administration's policies."

Still, Mr Speizer saw the kiwi falling back to UC70c on a longer horizon given the Fed's bias for higher rates, which would stoke demand for the greenback.

On Friday, data expected includes December quarter retail sales and January manufacturing figures.

In the morning, the kiwi fell to 81.89 yen from 82.22 yen on Thursday as Japan's currency was a beneficiary of investors' lower appetite for risk-sensitive assets.

It declined to 67.77 euro cents from 68.08c, was little changed at 57.98 British pence from 57.96p, increased to 4.95 Chinese yuan from 4.9443 yuan and gained to 93.92 Australian cents from A93.66c.

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