Dollar holds above 73 USc as investors await US economic data

The New Zealand dollar held above 73 US cents as investors await data out of the US to gauge the strength of the world's biggest economy after Federal Reserve chair Janet Yellen said she expected the central bank would hike interest rates this year.

The kiwi traded at 73.06 US cents at 5pm in Wellington from 73.02 cents at 8am and down from 73.20 cents on Friday in New York. The trade-weighted index fell to 75.97 from 76.28 last week.

The greenback rallied after US data showed core inflation rose 0.3 percent in April, faster than expected, and the biggest increase since January 2013. That data came as Yellen said in a speech that she anticipated raising the federal funds rate this year after a weak first quarter of economic activity would give way to heightened growth. US markets are closed for the Memorial Day holiday, and investors will watching a durable goods survey on Tuesday in the US and a preliminary gross domestic product report later this week to monitor the nation's economic growth.

"The two key points of US data are durable goods tomorrow and at the end of the week, preliminary GDP quarter-on-quarter," said Stuart Ive, senior dealer foreign exchange at OMF in Wellington. "The kiwi dollar remains in this track, or channel that we're in on the way down."

Ive said trading will remain relatively thin with other markets in the UK, parts of Europe and Hong Kong also closed today.

A BusinessDesk survey of 13 currency advisers predicts the kiwi may trade between 70.60 US cents and 75 cents this week. Eleven expect the kiwi to fall and two bet it will gain.

New Zealand's two-year swap rate decreased to 3.35 percent at 5pm in Wellington from 3.37 percent last week, while the 10-year swap rate slipped to 3.97 percent from 3.98 percent.

The kiwi was little changed at 93.32 Australian cents at 5pm in Wellington from 93.35 cents on Friday in New York, and traded at 4.5284 Chinese yuan from 4.5308 yuan last week.

The local currency increased to 66.49 euro cents from 66.34 cents last week, and traded at 47.21 British pence from 47.19 pence. It was little changed at 88.87 yen at 5pm in Wellington from 88.85 yen.

(BusinessDesk)