NZ dollar little changed as weaker commodities limit benefit of falling greenback

The US dollar fell to a four-month low against a basket of currencies overnight.

The New Zealand dollar was little changed, having reached the highest in almost a week overnight, as a decline in commodity prices and equities offset the effects of waning sentiment for the US dollar.

The kiwi traded at 70.43 US cents as at 8am in Wellington, having touched 70.67 cents overnight, from 70.45 cents late yesterday. The trade-weighted index was little changed at 76.21 from 76.26.

The US dollar fell to a four-month low against a basket of currencies overnight on concern that US President Donald Trump's failure to enact healthcare reform bodes poorly for other policy pledges likely to stimulate the US economy such as tax cuts and infrastructure spending. While the greenback fell against the euro and the yen its weakness failed to lift growth-linked currencies such as the kiwi and the Aussie dollar as the CRB Index of 19 commonly traded commodities fell to a two-week low and stocks on Wall Street slipped.

"Commodity prices all got hit overnight - that's why we've underperformed," said Tim Kelleher, head of institutional foreign exchange at ASB Bank. "We still expect Fed rate hikes down the line. Once the interest rate differential narrows that will weigh on the kiwi. It will be a case of sell on rallies."

The kiwi traded at 4.8369 yuan from 4.8407 yuan late yesterday, when it was helped by agreements announced between New Zealand and China during the state visit of Premier Li Keqiang, including a date for talks on upgrading the free-trade agreement and trial shipments of New Zealand chilled meat, the first such exports to the world's second-largest economy.

The kiwi dollar fell to 56.04 British pence from 56.23 pence and was little changed at 92.35 Australian cents from 92.34 cents. It rose to 77.92 yen from 77.73 yen and traded at 64.83 euro cents from 64.94 cents.