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NZ dollar little changed above 72 US cents as Trump weighs on greenback

Tuesday 24th January 2017

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The New Zealand dollar was little changed above 72 US cents, near its highest in more than a month, after US President Donald Trump expounded plans for protectionist policies including renegotiation of trade agreements and a border tax.

The kiwi traded at 72.12 US cents as at 8am in Wellington from 72.02 cents late yesterday. The trade-weighted index edged up to 78.77 from 78.65.

The US dollar index, which measures the greenback against a basket of currencies, fell to then lowest since Dec. 9, and stocks fell in the US and Europe after Trump formally ordered the US to withdraw from the Trans-Pacific Partnership trade deal and Bloomberg News reported he was also preparing to renegotiate the North American Free Trade Agreement. He has already declared 'war' on the media after reports that crowds for his inauguration were smaller than for Barack Obama, and reiterated plans to cut corporate taxes and regulations.

"As week one in office gets underway there is a growing sense of scepticism, not helped by the tone of Friday’s inaugural address and subsequent spat with the media," said Con Williams, rural economist at ANZ Bank New Zealand, in a note. "Within developed markets, there was a mild bias for safe haven FX as the USD remained defensive."

The yen, regarded as a safe-haven currency, strengthened to a week-high against the US dollar. The kiwi fell to 81.52 yen from 81.83 yen.

There is little local data scheduled for this week, although traders will be watching the performance of services index for December, due today, and the consumers price index for the fourth quarter, due on Thursday and expected to show annual inflation has returned to the Reserve Bank's target band.

The kiwi increased to 95.36 Australian cents from 95.13 cents and advanced to 4.9460 yuan from 4.9318 yuan. It edged up to 67.18 euro cents from 67.04 cents and fell to 57.77 British pence from 57.97 pence.

BusinessDesk.co.nz

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