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NZ dollar falls as Trump-Kim meeting spurs on greenback; Fed looms

Wednesday 13th June 2018

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The New Zealand dollar fell as the historic meeting between US President Donald Trump and North Korean leader Kim Jong Un spurred demand for the greenback as relations between the nations thawed, and ahead of the Federal Reserve's latest policy review.

The kiwi declined to 70.03 US cents as at 8am in Wellington from 70.37 cents yesterday. The trade-weighted index decreased to 73.51 from 73.72 yesterday.

The US dollar index, a measure of the greenback against a basket of currencies, gained 0.2 percent following the leaders' meeting, which ended with unspecific commitments to a denuclearisation of the Korean peninsula. The thawing relationship helped ease geopolitical fears that were heightened after a tense G7 leaders' summit over the weekend. The upcoming Fed review is now in focus with investors anticipating the central bank may accelerate its track for future rate hikes.

"The relationship between the two countries has surely improved but there is a healthy degree of scepticism that much else has changed," Bank of New Zealand senior markets strategist Jason Wong said in a note. "Against the backdrop of a slightly stronger USD, the NZD sits at the lower end of the range of the past 24 hours."

Local data today include May food prices and April accommodation, while across the Tasman Australian consumer confidence and a speech from Reserve Bank of Australia governor Philip Lowe will be in focus.

The kiwi traded at 92.49 Australian cents from 92.39 cents yesterday, and fell 4.4814 Chinese yuan from 4.5079 yuan.

The local currency declined to 59.59 euro cents from 59.81 cents yesterday ahead of the European Central Bank's policy review later this week, and traded at 77.26 yen from 77.22 yen, with the Bank of Japan rounding out the major monetary authorities meeting this week.

The kiwi fell to 52.36 British pence from 52.68 pence yesterday after UK Prime Minister Theresa May won the first of two votes in the British parliament over Brexit legislation.

(BusinessDesk)

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