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Kiwi up as US manufacturing dips

NZ NewswireNZ Newswire 1/09/2016 Jonathan Underhill

The New Zealand dollar has gained as the US dollar index declined following a weaker-than-expected US manufacturing report.

The kiwi rose to US72.80 cents as at 8am on Friday in Wellington from US72.51c late on Thursday. The trade-weighted index gained to 77.55 from 77.43.

The US dollar index dropped to 95.616, a three-day low, after the US manufacturing ISM report for August dropped to 49.4 from 52.6 per cent in July.

Economists had expected a more modest decline to 52.

The dollar index is still well above the 94.631 level of a week ago, before Federal Reserve chairwoman Janet Yellen and vice chairman Stanley Fischer talked up the data-dependent prospects of interest rate hikes, bringing more focus on Friday night's payrolls report.

"US non-farm payrolls will be followed by markets even more intensely than usual given recent Fed comments elevating its importance in the near term policy mix," said Westpac senior market strategist Imre Speizer.

"The US dollar's weakness overnight should support the NZD in a 72.20-73.20 US cent range ahead of tonight's important US payrolls report."

The market expects the US economy added 180,000 jobs in August, down from 255,000 in July. Mr Speizer said Westpac's forecast is a tad lower at 170,000.

"Employment gains are likely to see the unemployment rate edge back down to 4.8 per cent," he said in a note. "As is always the case, that depends on participation."

On Friday morning the New Zealand dollar rose to 96.42 Australian cents from A96.13c late on Thursday. It increased to 75.12 yen from 74.89 yen and gained to 4.8580 yuan from 4.8460 yuan. It was little changed at 64.98 euro cents from 65.04c and fell to 54.87 British pence from 55.16p.

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