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NZ dollar falls as US rate hike looms

NZ NewswireNZ Newswire 16/11/2016 Jonathan Underhill

The New Zealand dollar fell as the greenback rose to a level it has only touched once before since 2003 after Federal Reserve Bank of St. Louis President James Bullard said Donald Trump's presidential victory is unlikely to prevent a Fed rate hike next month.

The local currency fell to 70.74 US cents as at 8am in Wellington from 70.92 cents late on Wednesday.

The trade-weighted index edged up to 77.43 from 77.36 from 77.47 as the Australian dollar weakened ahead of employment data for October, which is expected to show Australia's economy added 15,000 jobs last month, while the unemployment rate rose to 5.7 per cent from 5.6 per cent. Traders said earthquake concerns are also restraining the kiwi.

"The market now sees a 14 December Fed hike as virtually a done deal" with odds of 93 per cent priced in, said BNZ's Kymberly Martin. "This view was corroborated by Fed's Bullard."

The US dollar index, which measures the greenback against a basket of major currencies, rose as high as 100.584, only the second time since 2003 that it has exceeded 100.5, amid expectations the Federal Reserve will raise interest rates next month.

The kiwi dollar climbed to 94.51 Australian cents from 93.80 cents ahead of the employment figures, it traded at 77.29 yen from 77.36 yen, fell to 4.8620 yuan from 4.8711 yuan, while it was little changed at 56.84 British pence and rose to 66.25 euro cents from 66 cents.

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