NZ dollar falls after better US data stokes bets on Fed interest rate hikes

Monday 29th February 2016

The New Zealand dollar declined after upbeat economic data in the US revived expectations the Federal Reserve will continue to hike interest rates.

The kiwi was at 66.39 US cents at 8am in Wellington, from 66.25 cents at the New York close, and down from 67.64 cents on Friday. The trade-weighted index dropped to 72.57 from 73.46 on Friday.

The dollar index, which measures the greenback against a basket of currencies, jumped to its highest in more than three weeks after US economic growth held up better than expected in the fourth quarter, January inflation beat expectations, and consumer spending and sentiment exceeded forecasts. That renewed investor confidence in the prospect for further US interest rate hikes this year, stoking demand for the US dollar.

"All the key US data releases were positive for the US dollar," Bank of New Zealand currency strategist Jason Wong said in a note. "These data led the market to price in more chance of the Fed hiking this year, driving US rates and the US dollar higher, and US equities down slightly."

In New Zealand today, traders will be eyeing the release of the ANZ Business Outlook survey at 1pm for signs of weaker business confidence and inflation expectations. Building consent data for January is published at 10:45am.

The New Zealand dollar fell to 93.02 Australian cents from 93.41 cents on Friday, declined to 60.74 euro cents from 61.12 cents, dropped to 47.82 British pence from 48.29 pence, slid to 75.62 yen from 76.33 yen and sank to 4.3412 yuan from 4.4211 yuan.

BusinessDesk.co.nz

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