Dollar hits new two-and-a-half month high

The dollar rose to a two-and-a-half month high against the greenback as investors grew wary of US President Donald Trump's stance on trade, with Germany accused of using a weak euro to exploit its trading partners and singled out as a hindrance to a trans-Atlantic deal.

The kiwi rose as high as 73.50USc and traded at 73.31USc as at 8am from 72.86USc yesterday. The trade-weighted index advanced to 79.89 from 79.64.

Stocks on Wall Street fell and the US dollar index dropped after Peter Navarro, the head of President Trump's new National Trade Council, told the Financial Times that Germany used a "grossly undervalued" euro to exploit its European and US trading partners and singled out the nation as an obstacle to the Transatlantic Trade and Investment Partnership.

German chancellor Angela Merkel rejected the claims the European nation could influence the euro. Mr Navarro's comments followed an earlier claim by President Trump accusing Japan and China of using monetary policy to pursue devaluation in the past to the detriment of US trading interests.

"The USD fell sharply as comments from Peter Navarro and President Trump indicated that Washington's view is that other countries gain advantage over the US by manipulating their exchange rates," ANZ Bank New Zealand senior rates strategist David Croy says.

"Against the current 'Trump fatigue' vibe, with local data strong and carry elevated, the risk is we go higher. Frankly, there is little other than generalised USD strength (should it re-emerge) standing in the way of the NZD."

Housing data showed New Zealand property values continued to rise in January.

Investors will be watching local employment figures which are expected to show New Zealand's unemployment rate dipped to 4.8% in the final three months of 2016, strong employment growth and accelerating wage inflation.

The local currency gained to 96.73Ac from 96.29Ac yesterday and increased to 5.0435 Chinese yuan from 5.0111 yuan. It slipped to 67.95€c from 68.11€c yesterday and was little changed at 58.30 British pence from 58.24 pence. The kiwi traded at 82.63 yen from 82.73 yen yesterday.

(BusinessDesk)