NZ dollar falls vs greenback on US confidence survey, reaches 19-month high vs euro

Monday 12th December 2016

The New Zealand dollar fell against the greenback after a measure of US consumer confidence climbed more than expected and reached a 19-month high versus the euro following the European Central Bank's stimulus extension.

The kiwi dollar fell to 71.30 US cents as at 8am in Wellington, from 71.39 cents in late New York trading on Friday and down from 71.69 cents in Asia at the end of last week. The local dollar traded at 67.56 euro cents from 67.61 cents in New York, where it earlier touched as high as 67.93 cents, the highest since May 2015.

The US dollar index extended its gains on Friday in the US after the University of Michigan consumer sentiment survey showed confidence jumped to 98 this month against expectations of a 94.5 reading and from 93.8 in November. The greenback had rallied the previous day after the ECB extended its bond-buying programme longer than expected to the end of 2017. With little local data scheduled this week, the Federal Open Market Committee's meeting is likely to be the biggest event, with a rate hike expected that will narrow the premium offered by the kiwi dollar.

"Broad USD strength returned on Friday as investors turned their attention to this Thursday’s Federal Reserve monetary policy meeting," traders at HiFX said in a report. "Supported by robust economic data of late the Fed are widely expected to hike rates at this week’s meeting."

The kiwi advanced against the euro last week after the ECB's announcement and President Mario Draghi's comments that no thought had been given to an early end to quantitative easing.

The New Zealand dollar traded at 95.58 Australian cents, down from 95.75 cents in New York last week and from 96.06 cents in Wellington on Friday.

The trade-weighted index was at 78.52, down from 78.77 in Wellington at the end of last week. The kiwi dollar fell to 56.68 British pence from 56.73 pence in New York and 56.91 pence at the end of Asia's week. It declined to 4.9220 yuan from 4.9261 yuan in New York and from 4.9459 yuan in Wellington on Friday. It traded at 82.18 yen from 82.22 yen in New York on Friday and from 81.99 yen at the end of last week in Asia.

BusinessDesk.co.nz

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