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NZ dollar falls as data stokes greenback

NZN 23/11/2016 Jonathan Underhill

The New Zealand dollar fell as measures of US durable goods orders and consumer sentiment rose, stoking sentiment about the US economy and the outlook for US interest rates.

The kiwi dollar fell to 70.05 as at 8:30am in Wellington, having earlier dropped as low as 69.89 cents, from 70.62 cents late on Wednesday. The trade-weighted index fell to 77.33 from 77.68.

The US dollar rose to the highest level in more than a decade after a US Commerce Department report showed that orders for US durable goods rose a better-than-expected 4.8 per cent in October while the University of Michigan's consumer sentiment index rose to a final reading of 93.8 in November, the highest level since May.

Meanwhile, minutes of the last Federal Reserve policy meeting showed the American central bank saw enough economic growth to warrant rate hikes soon.

The US dollar index rose to a 16-year high, the yield on 10-year Treasuries touched a 16-month high and the Dow Jones Industrial Average reached a record high.

"US interest rates and the US dollar made fresh multi-year highs following some strong economic data," said Westpac's Imre Speizer,.

He said the Fed minutes "merely confirm the 25 basis point hike in December which the market has fully priced in".

US financial markets are closed on Thursday for the Thanksgiving holiday and Mr Speizer said the kiwi is vulnerable to falling below 69.90 US cents given the greenback's strength.

The kiwi dropped to 94.78 Australian cents from 95.16 cents, declined to 4.8457 yuan from 4.8655 yuan, dropped to 56.29 British pence from 56.87 pence, slipped to 66.39 euro cents from 66.48 cents and rose to 78.87 yen from 78.46 yen.

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