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NZ dollar rallies vs greenback after Trump comments, falls vs pound on May speech

Wednesday 18th January 2017

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The New Zealand dollar rose to a month-high against the greenback after US president-elect Donald Trump said the US currency was too high and fell against the pound after UK Prime Minister Theresa May said any exit from the European Union would be put to a parliamentary vote.

The kiwi rose to 72.02 US cents as at 8am in Wellington from 71.14 cents late yesterday. The local currency fell to 57.99 British pence from 59 pence yesterday.

May outlined a 12-point plan to leave the EU while soothing financial markets by saying the Brexit would be voted on by both houses of the parliament and would avoid any "cliff-edge for business or a threat to stability". The US dollar index sank to its lowest level in more than a month after the Wall Street Journal published excerpts from a weekend interview with Trump where he said the greenback's strength against the Chinese yuan "is killing us". The comments helped drive down the US dollar which had rallied in the wake of Trump's election victory on optimism his policies would stoke economic growth.

"With a market that is heavily long USD, these sorts of comments do not inspire traders to hold onto that position," said Jason Wong, currency strategist at Bank of New Zealand, in a note. May's speech reassured investors with comments that the UK would remain a good friend to the EU after making a clean break from the economic bloc, he said.

The trade-weighted index rose to 78.68 from 78.35 late yesterday. The GlobalDairyTrade auction overnight didn't detract from a broadly stronger New Zealand dollar. The GDT price index rose 0.6 percent in the auction while whole milk powder slipped 0.1 percent to US$3,283 a tonne.

The kiwi rose to 95.25 Australian cents from 95.07 cents and gained to 4.9369 yuan from 4.9104 yuan. It advanced to 67.29 euro cents from 66.97 cents and traded at 81.22 yen from 81.13 yen yesterday. 

BusinessDesk.co.nz

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