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Kiwi up as profits booked on surging USD

NZ Newswire logoNZ Newswire 29/12/2016 Paul McBeth
New Zealand coin is arranged for a photograph in Wellington, New Zealand © Mark Coote New Zealand coin is arranged for a photograph in Wellington, New Zealand

The New Zealand dollar has gained as investors looked to take advantage of an 8.2 per cent gain in the greenback over the past quarter, booking profits and squaring up their books heading into 2017.

The kiwi rose to US69.44 cents as at 8am on Friday in Wellington from US69.28c on Thursday. The trade-weighted index edged up to 77.56 from 77.41.

The greenback has been on a tear this quarter as the Federal Reserve delivered on an expected interest rate hike in December, and signalled a more aggressive tightening cycle in the new year after Republican candidate Donald Trump beat Hillary Clinton, on a campaign of tax reform and infrastructure spending.

That's seen yields on 10-year US Treasuries soar to 2.48 per cent from 1.78 per cent before the election, boosting the attraction of global bonds and also the greenback.

"In thin financial markets at the end of the financial year and end of quarter, there's going to be some profit taking, but it will be very short-lived," said OMF's Paul Webber.

"We could see the kiwi push into the high 69s, but I'd be surprised it we saw 70 US cents."

On Friday morning the kiwi rose to 96.45 Australian cents from A96.16c on Thursday.

That cross-rate was trading near the top of its recent ranges and Mr Webber expected that trend to remain intact until either New Zealand or Australia shifted interest rates.

The local currency also rose to 4.8278 Chinese yuan from 4.8180 yuan and was little changed at 80.93 yen from 80.87 yen. It increased to 56.75 British pence from 56.55p and dipped to 66.21 euro cents from 66.33c.

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