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NZ dollar falls as greenback strengthens

NZ NewswireNZ Newswire 20/10/2016 Jonathan Underhill

The New Zealand dollar fell against a broadly stronger US dollar after the European Central Bank said it was in no hurry to end quantitative easing measures.

The kiwi fell to 71.91 US cents as at 8:30am in Wellington, from 72.40 cents late on Thursday. The trade-weighted index slipped to 77.37 from 77.58.

The ECB kept its policy settings unchanged, with a refinancing rate at zero. President Mario Draghi said the bank would probably 'taper' its QE measures, which Bloomberg reported as meaning the stimulus programme could run beyond its March 2017 end date.

The US dollar index rose about 0.4 per cent to a seven-month high. The kiwi dollar extended its gains against the Australian dollar after that country's weaker-than-expected labour market report.

The kiwi traded at 94.41 Australian cents, from 94.34 cents, which was the highest since October 10.

The Australian economy shed 9,800 jobs in September from August, following a 9,000 drop the previous month. The unemployment rate unexpectedly fell to 5.6 per cent, although that largely reflected a decline in the participation rate.

While traders expect the Reserve Bank of Australia is done cutting rates for now, a cut is still seen as a risk. By contrast, a rate cut by the New Zealand central bank next month is largely priced into the currency, traders said.

The kiwi dollar fell to 58.70 British pence from 58.90 pence, slipped to 65.83 euro cents from 65.96 cents, fell to 74.77 yen from 74.96 yen and it declined to 4.8516 yuan from 4.8773 yuan.

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