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Dollar falls to two-month low as US economic data boosts greenback

Kiwi touched 72.15USc, and was trading at 72.18USc at 8am in Wellington.

Tina Morrison
Wed, 27 May 2015

The New Zealand dollar fell to a two-month low as upbeat US economic data reinforced expectations the Federal Reserve will hike interest rates this year, boosting demand for the greenback.

The kiwi touched 72.15USc, and was trading at 72.18USc at 8am in Wellington, from 73.13USc at 5pm yesterday. The trade-weighted index dropped to 75.60 from 76.15 yesterday.

The dollar index, which measures the greenback against a basket of currencies, touched a month high following a string of generally positive US data overnight. Reports showed US core capital goods orders rose 1% in April, ahead of the 0.3% expected, as the March figure was revised higher, while measures of consumer confidence, house prices and house sales also improved.

"The US dollar found a solid bid as markets found reasons to be optimistic from the latest US data dump," ANZ Bank New Zealand senior economist Philip Borkin and senior FX strategist Sam Tuck said in a note. The latest data supports the theory that the US economy will bounce in the second quarter, following a weaker first quarter, they said.

ANZ expects the kiwi to trade between 71.60-73.40USc today.

In New Zealand today, traders will be awaiting the outcome of Fonterra Cooperative Group's board meeting. The world's largest dairy exporter is expected to provide its first payout forecast for the upcoming season tomorrow morning. Analysts have been pulling back their expectations for the season as prices for dairy products, the country's largest commodity export, haven't rebounded as soon as expected.

The New Zealand dollar was little changed at 93.33Ac from 93.36Ac yesterday, fell to 66.37 euro cents from 66.85 cents, dropped to 46.91 British pence from 47.32p and declined to ¥88.84 from ¥89.11.

(BusinessDesk)

Tina Morrison
Wed, 27 May 2015
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Dollar falls to two-month low as US economic data boosts greenback
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