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NZ dollar jumps as greenback wanes

NZ Newswire logoNZ Newswire 31/01/2017 Paul McBeth
New Zealand coin is arranged for a photograph in Wellington, New Zealand © Mark Coote New Zealand coin is arranged for a photograph in Wellington, New Zealand

The New Zealand dollar rose to a two-and-a half month high against the greenback as investors grew more wary of US President Donald Trump's stance on trade, with Germany accused of using a weak euro to exploit its trading partners and singled out as a hindrance to a trans-Atlantic deal.

The kiwi rose as high as 73.50 US cents and traded at 73.31 cents as at 8am from 72.86 cents on Tuesday.The trade-weighted index advanced to 79.89 from 79.64.

Stocks on Wall Street fell and the US dollar index declined after Peter Navarro, the head of Trump's new National Trade Council, told the Financial Times that Germany used a "grossly undervalued" euro to exploit its European and US trading partners.

He also singled out the nation as an obstacle to the Transatlantic Trade and Investment Partnership.

German chancellor Angela Merkel rejected the claims the European nation could influence the euro. Navarro's comments followed an earlier claim by Trump accusing Japan and China of using monetary policy to pursue devaluation in the past to the detriment of US trading interests.

"The USD fell sharply as comments from Peter Navarro and Trump indicated that Washington's view is that other countries gain advantage over the US by manipulating their exchange rates," ANZ's David Croy said.

"Against the current 'Trump fatigue' vibe, with local data strong and carry elevated, the risk is we go higher. Frankly, there is little other than generalised USD strength (should it re-emerge) standing in the way of the NZD."

Housing data showed New Zealand property values continued to rise in January. Investors will be watching local employment figures which are expected to show New Zealand's unemployment rate dipped to 4.8 per cent in the final three months of 2016, strong employment growth and accelerating wage inflation.

The local currency gained to 96.73 Australian cents from 96.29 cents, increased to 5.0435 Chinese yuan from 5.0111 yuan, slipped to 67.95 euro cents from 68.11 cents, was little changed at 58.30 British pence from 58.24 pence and traded at 82.63 yen from 82.73 yen.

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