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NZ dollar rises above US71c

NZ Newswire logoNZ Newswire 30/05/2017 Jonathan Underhill

The New Zealand dollar rose above US71c for the first time since early March after weak US data raised doubts about further US Federal Reserve interest rate hikes after one expected in June.

The kiwi dollar traded at US70.94c as at 8am in Wellington, and earlier touched US71.01c, from US70.46c late on Tuesday.

The trade-weighted index rose to 76.69 76.31 on Tuesday.

The US core PCE price deflator rose 1.5 per cent year on year, meeting market expectations but also the lowest annual inflation in about 18 months, while the Conference Board measure of consumer confidence fell for a second month in May.

Locally, the release of the Reserve Bank's financial stability report at 9am will be an early focus for traders.

"Despite inflation heading in the opposite direction to the Fed's target, the market still has high conviction that the Fed will hike rates next month," Bank of New Zealand currency strategist Jason Wong said.

"But beyond June the outlook becomes murkier and the Fed funds curve only has a modest upward slope."

Wong said no surprises were expected from the stability report.

"This rarely moves the market. Risks in the dairy sector have faded, but the housing market likely still remains an area of concern for the bank," he said.

Out later on Wednesday is ANZ's business confidence survey for May.

The kiwi traded at A95.05c from A94.88c late on Tuesday.

It traded at 63.36 euro cents from 63.33 euro cents and rose to 4.8618 yuan from 4.8283 yuan.

The local currency rose to 55.19 British pence from 54.99 pence and rose to 78.60 yen from 78.12 yen.

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