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NZ dollar little changed near 4-week low

NZN 10/04/2017 Jonathan Underhill

The New Zealand dollar was little changed near a four-week low on Monday.

This followed New York Fed President William Dudley's comment that the US central bank wouldn't need to delay rate hikes much in order to shrink its balance sheet.

The kiwi traded at US69.36c as at 5pm in Wellington from 69.34c in late New York trading on Friday, when it fell as low as 69.26c, the lowest since March 15.

Mr Dudley clarified earlier comments about a pause in the rate hike cycle to reduce the bank's US$4.5 trillion balance sheet, which some traders had read more into than the "little pause" he had meant.

The market is now pricing in a 64.4 per cent chance of a hike at the Fed's June meeting, above the threshold of about 60 per cent that the Fed likes to see in the weeks leading up to a policy meeting.

"Dudley probably clarified previous comments that were arguably misinterpreted," said Mark Johnson, senior dealer at OMF.

"The US dollar trajectory looks more positive." By contrast, the kiwi "has been becalmed", he said.

While milk powder prices have recovered in recent GlobalDairyTrade auctions, traders are now considering the severe wet weather that hit the central North Island with "the perception or fear it will affect the start to the new season, given it is already wet underfoot," Mr Johnson said.

"If that's the case it's going to be difficult to sow and grow heading into the winter months."

The kiwi rose to 77.30 yen from 77 yen late on Friday in New York and gained to A92.62c from 92.40c. It traded at 65.52 euro cents from 65.46 cents and traded at 56 British pence from 56.03 pence. The kiwi increased to 4.7885 yuan from 4.7829 yuan.

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