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Kiwi up amid rising global tension

NZ Newswire logoNZ Newswire 10/04/2017 Jonathan Underhill

The New Zealand dollar has risen amid concern geopolitical risks are on the rise after the US diverted a US carrier fleet to the Korean peninsula, while Federal Reserve chair Janet Yellen gave an upbeat view of American and global economic growth.

The kiwi gained to US69.55 cents as at 8.30am on Tuesday in Wellington from US69.36c late Monday. The trade-weighted index rose to 76 from 75.84.

US Secretary of State Rex Tillerson is due in Moscow this week for talks that come on the heels of the US missile strike on the Syrian regime which counts Russia as its biggest supporter. Meanwhile, US President Donald Trump has said America may act alone to bring North Korea to heel if China doesn't step up, while there have also been reports of Chinese troops near the Korean border.

Dr Yellen, who is currently giving an address at the University of Michigan, said the US economy was "healthy" and the Fed was close to reaching its policy objectives, but she also repeated that rate hikes would be gradual.

"With few data releases, geopolitical risks have taken centre-stage," said BNZ currency strategist Jason Wong.

The market will be watching Dr Yellen's speech following the US employment report, which saw the unemployment rate fall to its lowest level in 10 years, and comments on the likely shrinkage of the Fed's balance sheet from late this year, he said.

On Tuesday morning the kiwi slipped to 77.16 yen from 77.30 yen late Monday and gained to 92.75 Australian cents from A92.62c. It traded at 65.64 euro cents from 65.52c and was little changed at 56.05 British pence from 56p. The kiwi increased to 4.8002 yuan from 4.7885 yuan.

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