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NZ dollar dips vs greenback, gains vs yen

NZN 16/06/2017 Rebecca Howard

The New Zealand dollar struggled to gain traction against the US dollar on Friday after the US Federal Reserve kept intact plans for another rate hike this year.

It pushed higher against the yen after the Bank of Japan kept monetary policy steady.

The kiwi slipped to US72.08c as at 5pm from 72.22c Thursday, following the Fed decision.

It was at 80.14 yen from 79.16 yen after the statement from the BOJ, which also upgraded its assessment of private consumption and overseas growth, signalling its confidence that an export-driven economic recovery was broadening and gaining momentum.

The US dollar remained firm in the Asian trading session after the Federal Open Market Committee was relatively hawkish Thursday, releasing its plan for balance sheet reduction earlier than expected and keeping the interest rate outlook unchanged.

"US inflation indicators and the Fed are expected to be the key drivers of the NZD outlook for the rest of the year," said Bank of New Zealand currency strategist Jason Wong.

"By contrast, NZ monetary policy will take the back seat, with the RBNZ's clear policy guidance that rates won't be changing for a long time," said Mr Wong.

All 16 economists surveyed by Bloomberg expect no change in the official cash rate at next Thursday's review.

The gross domestic product data "supports our view that the RBNZ is likely to sit on its hands and keep the official cash rate unchanged at 1.75 per cent for an extended period. We maintain our view that the RBNZ will not hike interest rates until late 2018," said Kiwibank chief economist Zoe Wallis.

Mr Wong expects the kiwi to hover around the 95 Australian cents level for the rest of the year.

The kiwi fell to 56.44 British pence from 56.64 pence Thursday. The kiwi was trading at 4.9108 yuan from 4.9063 yuan, and rose to 64.67 euro cents from 64.36 cents.

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