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NZD gains amid broad greenback weakness

NZ NewswireNZ Newswire 1/08/2016 Jonathan Underhill

In Australia and New Zealand, central banks are preparing to ease monetary policy, with the RBA expected to cut its cash rate on Tuesday. © Reuters In Australia and New Zealand, central banks are preparing to ease monetary policy, with the RBA expected to cut its cash rate on Tuesday. The New Zealand dollar rose amid broad weakness in the US dollar after figures showed the American economy grew less than expected between April and June, adding to the argument that the Federal Reserve won't rush to raise interest rates this year.

The kiwi traded at 72.23 US cents as at 5pm in Wellington, from 72.13 cents in late New York trading on Friday and up from 70.88 US cents in Asia at the end of last week. The trade-weighted index was at 76.61, up from 75.74 in Wellington on Friday and well above the 71.6 average the Reserve Bank has projected for the July to September quarter.

US gross domestic product rose at an annualised rate of 1.2 per cent in the second quarter, undershooting the 2.5 per cent forecast in a Bloomberg survey and keeping intact expectations the Federal Reserve won't be in a hurry to raise interest rates this year.

In Australia and New Zealand, central banks are preparing to ease monetary policy, with the RBA expected to cut its cash rate on Tuesday.

"The big news is we're going to see nothing out of the Fed for quite some time," said Nick Tvedt, senior corporate FX dealer at NZForex.

"The Fed, if they do something, will then stand far back and look at what impact that has had rather than going each quarter."

The kiwi traded at 73.89 yen from a three-week low of 73.10 yen in Wellington on Friday and rose to 4.7893 yuan from 4.7840 yuan. It rose to 64.60 euro cents from 64.44 cents on Friday in New York and was little changed at 54.50 British pence from 54.45 pence.

New Zealand's two-year swap rate was little changed at 2.01 per cent, near a record low, and 10-year swaps rose 1 basis point to 2.42 per cent.

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