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NZ dollar falls against stronger yen

NZN 15/01/2017 Jonathan Underhill

The New Zealand dollar fell against the yen, which has broadly strengthened ahead of Donald Trump's inauguration on Friday, and gained against the pound on renewed Brexit concerns.

The Kiwi dollar fell to 80.92 yen at 5pm from 81.63 yen in late New York trading on Friday. It rose to 58.98 British pence from 58.44 pence and weakened to 70.89 US cents from 71.27 cents at the end of last week.

The yen strengthened to 114.16 per US dollar from 114.67 on Friday in New York as traders contemplated potential changes in US economic policy under a Trump administration, which could include a more protectionist trading position with partners including China.

The Kiwi gained against the pound after the Sunday Times reported that British Prime Minister Theresa May will signal this week her intention to drive ahead with plans to exit the European Union.

"Heavy US dollar trades are starting to flow through, the closer we get to Trump's inauguration," said Tim Kelleher, head of institutional foreign exchange sales at ASB Bank.

The weaker pound "is completely to do with May's speech about a hard Brexit," he said.

May is scheduled to give a speech on Tuesday which the Sunday Times reported would signal plans for a "hard Brexit", trading off membership of the tariff-free zone for the right to curb migration and forge separate trade deals with other regions and nations.

US financial markets are closed on Monday for Martin Luther King Jr. Day.

The trade-weighted index slipped to 78.07 from 78.30.

The Kiwi decreased to 94.86 Australian cents from 94.98 cents on Friday in the US.

New Zealand's two-year swap rate fell three basis points at 2.35 per cent, while the 10-year swap rate fell two basis points to 3.35.

(BusinessDesk)

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