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NZ dollar hits 2016 high against yen

NZ Newswire logoNZ Newswire 13/12/2016 Jonathan Underhill

The New Zealand dollar was little changed against the US dollar and reached its highest level this year against the yen ahead of the outcome of the Federal Open Market Committee's two-day meeting which will show how quickly the central bank intends raising interest rates.

The kiwi dollar traded at 71.98 US cents as at 8am in Wellington from 71.94 cents late on Tuesday. The trade-weighted index rose to 79.03 from 78.91.

The Fed is widely expected to announce a 25 basis point increase in the fed funds rate, but will also indicate the track of US interest rates over coming years.

"Tomorrow morning the US FOMC will meet and is set to deliver its second hike of this cycle," said BNZ's Kymberly Martin.

"The last was in December 2015. We and the market believe the Fed's 'gradual' tightening process may pick up marginally from this sloth-like pace next year. We anticipate two more hikes."

Helping the prospects for the kiwi and the Australian dollars overnight were figures showing Chinese industrial production grew a faster-than-expected 6.2 per cent in November while retail sales gained 10.8 per cent, also beating estimates. The kiwi edged up to 4.9641 yuan from 4.9622 yuan.

The kiwi dollar traded at 67.78 euro cents from 67.62 cents, rose to 96 Australian cents from 95.93 cents, traded at 56.82 British pence from 56.73 pence and gained to 82.95 yen from 82.78 yen, having earlier touched 83.21 yen, the highest level this year.

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