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NZD falls from presidential-debate highs

NZ NewswireNZ Newswire 28/09/2016 Jonathan Underhill

© Bloomberg The New Zealand dollar retreated from its overnight highs on speculation figures over the next two weeks will point to an improving US economy, making a Federal Reserve rate hike in December more likely.

The kiwi traded at 72.72 US cents, having reached as high as 73.25 cents overnight, from 72.90 cents on Tuesday. The trade-weighted index slipped to 77.11 from 77.26.

The kiwi gained overnight on the view that Hillary Clinton outshone rival Donald Trump in the first US presidential debate, boosting optimism a Trump-led White House wouldn't wind back on trade pacts such as with Mexico and take other steps that might hurt currencies tied to global growth.

US data due out next week include manufacturing, services and labour market figures for September, which would follow a report yesterday showing more upbeat consumers.

"The real focus is what's going on it the US - the Fed but also the political system," said Angus Nicholson, a market analyst at IG Markets.

The bond market is pricing in just a 50 per cent chance of a rate hike by the Fed "so US economic data is going to be very important for US interest rates, which have a big, big influence on the kiwi" trumping anything the Reserve Bank of New Zealand may say.

Nicholson expects US data to show "a bit of an improvement."

The kiwi fell to 94.72 Australian cents from 95.10 cents. It decreased to 4.8473 yuan from 4.8627 yuan and slipped to 73.10 yen from 73.45 yen. It was little changed at 64.81 euro cents from 64.84 cents and declined to 55.91 British pence from 56.14 pence.

New Zealand's two-year swap rate fell 1 basis point to 1.97 per cent and the 10-year swaps fell 2 basis points to 2.43 per cent.

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