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Dollar drops as greenback buoyed by stronger housing, consumer confidence reports

The New Zealand dollar weakened as the US dollar was buoyed by stronger-than-expected US housing and consumer confidence data.

The kiwi slipped to 86.82 US cents at 8am in Wellington, from 87.19 cents at 5pm yesterday. The trade-weighted index dropped to 80.82 from 81.08 yesterday.

Investor optimism increased about a recovery in the world's largest economy after a report showed new home sales in the US surged 18.6 percent in May, the largest monthly gain since January 1992 and ahead of expectations for a 1.4 percent rise. A separate report showed US consumer confidence rose to 85.2 in June, ahead of expectations of 83.5 and up from 82.2 in May.

"The New Zealand dollar lost ground amid broader US dollar strength overnight," Bank of New Zealand currency strategist Raiko Shareef said in a note. "The improvement in US data, accompanied by an increasing debate on whether the Fed is being complacent on inflation risks, is perhaps taking some shine off high-yielding currencies such as the Australian dollar and New Zealand dollar."

No data is scheduled for release in New Zealand today, suggesting the kiwi will trade between 86.80 US cents and 87.30 cents, Shareef said.

Tonight, traders will be eyeing US data on durable goods orders and first quarter GDP, which is expected to be revised lower.

The New Zealand dollar advanced to 92.60 Australian cents from 92.50 cents yesterday. Reserve Bank of Australia deputy governor Philip Lowe is speaking as part of a panel in Melbourne today on global challenges for the G20 group of finance ministers and central bankers from 20 major economies.

The kiwi weakened to 63.81 euro cents from 64.14 cents even after the IFP German business confidence report fell to its lowest level this year.

The local currency slipped to 51.11 British pence from 51.22 pence. Bank of England governor Mark Carney and other senior bank officials told the UK parliament's treasury select committee that the UK economy had spare capacity that needed to be used up before interest rates rose.

The New Zealand dollar edged lower to 88.47 yen from 88.88 yen yesterday.

(BusinessDesk)

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