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NZ dollar gains as Fed's hiking plans, US manufacturing data fail to underpin greenback

Friday 2nd February 2018

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The New Zealand dollar rose against a broadly weaker greenback after the Federal Reserve's reiteration of its rate hike plans and strong US manufacturing data failed to stoke the US currency.

The kiwi gained to 73.85 US cents as at 8am in Wellington from 73.66 cents late yesterday. The trade-weighted index rose to 75.15 from 74.96.

The ISM manufacturing index was 59.1 in January from 59.3 in December, beating estimates of 58.6 in the latest month. The data came after Federal Reserve chair Janet Yellen emphasised the Fed's intention to raise interest rates this year and economists are debating whether it will be three hikes or four. Today's payrolls data in the US will be keenly watched for evidence of wage inflation and economic growth.

"Despite a hawkish tilt to yesterday’s FOMC decision, the USD remained on the defensive overnight, leaving the NZD with really only one way to go," said Sharon Zollner, chief economist at ANZ Bank New Zealand. "Is it justified up here? Not in our opinion. But the USD is struggling for friends at present and that is a hard thing to stand in the way of. Tonight’s non-farm payrolls release is now in the spotlight."

The US economy probably added 180,000 jobs in January, from a 148,000 gain the previous month while average hourly earnings gained 2.6 percent year-on-year, up from a 2.5 percent rate a month earlier.

In New Zealand, traders will be watching for the ANZ consumer confidence survey for January, and building permits and migration for December.

The local currency rose to 91.94 Australian cents from 91.48 cents late yesterday. The kiwi advanced to 4.6503 yuan from 4.6320 yuan and gained to 80.85 yen from 80.53 yen. It fell to 59.14 euro cents from 59.28 cents and was little changed at 51.81 British pence from 51.86 pence.

(BusinessDesk)

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