NZ dollar rises

australian-and-new-zealand-dollarThe New Zealand dollar has risen after weaker-than-expected US economic data and as the Federal Reserve raised its key interest rate as expected and affirmed its track for a further hike this year.

The kiwi climbed to US72.70 cents as at 0800 on Thursday in Wellington and earlier touched US73.19c, a four-month high, from US72.21c late Wednesday.

The trade-weighted index reached 78.33, the highest since early March, and was recently at 77.99 from 77.65 on Wednesday.

The Fed raised the fed funds rate to a range of 1 per cent to 1.25 per cent and reiterated that it saw one more hike this year. It also affirmed plans to begin trimming the size of its balance sheet, reducing holdings of bonds and other securities it had been hoovering up to provide the US economy with extraordinary levels of support.

Ahead of the Fed statement, the US dollar had dropped after figures showed the biggest decline in retail sales in 16 months last month, while consumer prices unexpectedly fell.

“The US data was soft, and the Fed’s tone was initially seen as dovish (on the idea that balance sheet trimming would supplant rate hikes),” said ANZ senior rates strategist David Croy.

“However, the NZD faces a test of its own today with GDP data, and it feels the risks are skewed to the downside given yesterday’s current account miss on net exports.”

On Thursday morning, the kiwi traded at 95.76 Australian cents from A95.72c late Wednesday. It rose to 57.01 British pence from 56.62p and gained to 4.9361 yuan from 4.9066 yuan. It rose to 79.69 yen from 79.47 yen and gained to 64.81 euro cents from 64.36c.

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