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NZ dollar falls to four-month low

NZN 12/03/2017

The New Zealand dollar fell to a four-month low against the euro after reports the European Central Bank may begin raising interest rates even before the end of its quantitative easing programme.

The kiwi dollar traded at 64.82 euro cents as at 8am in Wellington, and earlier touched 64.67 cents, the lowest since November 9, from 65.16 cents on Friday.

The local currency traded at US69.31c from 69.28c in New York on Friday, having touched as low as 68.87 cents last week.

Bloomberg News and Reuters reported some ECB policymakers discussed the possibility of hiking interest rates from record low levels before the end of the bank's massive bond-buying programme.

Meanwhile, US non-farm payrolls for February showed the US economy added 235,000 jobs last month, more than the 200,000 expected and stoking expectations the Federal Reserve will start hiking rates this week.

"US non-farm payrolls figures were solid, but not strong enough for the market to price in more than the near three hikes currently for 2017," ANZ Bank New Zealand senior economist Philip Borkin said.

The euro outperformed "after unnamed sources within the ECB said they discussed raising interest rates before the end of QE at its meeting last week".

Locally, data out this week includes fourth-quarter gross domestic product on Thursday, which is expected to show the economy slowed to a 0.5 per cent pace from 1.1 per cent in the third quarter and below the central bank's 1 per cent forecast.

Ahead of that are food prices for February, out today, consumer confidence for the first quarter tomorrow and fourth-quarter balance of payments on Wednesday.

The trade-weighed index was at 75.98 from 75.91 on Friday.

The kiwi traded at A91.85 cents from 91.74c in New York on Friday.

It was at 4.7859 yuan from 4.7852 yuan and 79.47 yen from 79.45 yen. It was at 56.92 British pence from 56.88 pence last week.

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