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NZ dollar falls to new two-month low

NZ Newswire logoNZ Newswire 8/03/2017 Paul McBeth

The New Zealand dollar dropped to a new two-month low after a stronger than expected US jobs report stoked expectations for the Federal Reserve to raise interest rates as early as this month.

The kiwi fell to US69.06c as at 8am from US69.63c on Wednesday. The trade-weighted index declined to 75.88 from 76.18 on Wednesday.

Yields on US 10-year Treasuries rose 4 basis points to 2.55 per cent and the US dollar index was up 0.3 per cent after the ADP employment report beat expectations with a larger increase in private payrolls last month.

The figures are seen as a precursor to the official non-farm payrolls report on Friday, and boosted expectations the US central bank will go ahead with raising interest rates this month as growth in the world's largest economy remains robust.

Bank of New Zealand currency strategist Jason Wong said the kiwi was already on the backfoot after milk powder prices fell more than predicted at this week's GlobalDairyTrade auction and local data, including Wednesday's manufacturing survey, indicated slowing economic growth.

"At a time when the US economic surprise indicator is galloping ahead, NZ's version is heading south," Mr Wong said.

"That combo, as well as weaker dairy pricing, have been a factor in the NZD's recent underperformance, not only against the USD but also on the crosses."

The local currency traded at A91.65 cA from A91.59c cents on Wednesday and fell to 4.7716 Chinese yuan from 4.8041 yuan.

It declined to 56.78 British pence from 57.02 pence on Wednesday and fell to 65.46 euro cents from 65.89 cents. The kiwi traded at 79.02 yen from 79.15 yen.

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