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NZ dollar falls vs greenback on Beige Book, gains vs pound after UK inflation; CPI looms

Thursday 19th April 2018

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The New Zealand dollar fell against the greenback after the Federal Reserve's Beige Book indicated that the US economy continued to expand through April and rose versus the pound after weaker-than-expected UK inflation. NZ first-quarter inflation data is out this morning.


The kiwi dollar fell to 73.20 US cents as at 8am in Wellington from 73.37 cents late yesterday. It rose to 51.53 British pence from 51.28 pence yesterday.


The Fed's Beige Book showed the US economy grew at a modest to moderate pace in March and through April, with a tight labour market. The kiwi rose against a broadly weaker pound after figures showed UK headline CPI slowed to a 2.5 percent pace from 2.7 percent, year-on-year, in March while core CPI slowed to 2.3 percent from 2.5 percent. In New Zealand, figures today are expected to show quarterly inflation of 0.4 percent, for an annual rate that slowed to 1.1 percent from 1.6 percent, largely on government policy changes to tertiary education fees.


"The NZD continues to drift off ahead of today’s local CPI figures, where the market appears to be skewed towards a softer outcome," said Liz Kendall, senior economist at ANZ Bank New Zealand, in a note. "Sterling grabbed the limelight in early trading, falling in response to weaker-than-expected UK inflation."


The New Zealand dollar rose to 94.63 Australian cents from 94.43 cents yesterday ahead of Australian employment figures which are expected to show that economy added 20,000 jobs in March, up from 17,500 a month earlier, while the jobless rate fell to 5.5 percent from 5.6 percent.


The kiwi gained to 92.47 Canadian cents from 92.05 cents after the Bank of Canada said it "remains cautious with respect to future policy adjustments", a less hawkish view than expected.


The trade-weighted index slipped to 74.97 from 75.17.


The kiwi dollar fell to 4.5919 yuan from 4.6120 yuan. It traded at 59.15 euro cents from 59.24 cents and fell to 78.49 yen from 78.70 yen.



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