NZ dollar falls as US economy grows more than expected
The New Zealand dollar fell after data showed the US economy grew more than expected in the third quarter, stoking demand for the greenback on heightened expectations the Federal Reserve will start hiking interest rates.
The kiwi fell to 77.02 US cents at 8am in Wellington from 77.37 cents yesterday. The trade-weighted index declined to 78.41 from 78.60.
US gross domestic product grew at an annual pace of 5 percent in the third quarter, its fastest pace since the same period in 2003. The data drove the US Dollar Index above 90 for the first time since before the 2008 global financial crisis as investors bet the Fed will have to start raising interest rates in the face of growing economic momentum.
"Every central banker says things are data dependent, but the problem with that is when we get good data the party poppers come out, and when we get bad data it's cloth and ashes," said Peter Cavanaugh, client adviser at Bancorp. "The US dollar had a rush of blood to the head on the GDP."
Cavanaugh said while the kiwi dollar was on the decline against the greenback, it was still strong against other cross-rates.
Markets are expected to be fairly quiet today as traders look to the Christmas and New Year holidays.
The kiwi was little changed at 92.90 yen at 8am in Wellington from 92.94 yen yesterday, and slipped to 95.09 Australian cents from 95.23 cents. It was little changed at 63.27 euro cents from 63.26 cents yesterday, and traded at 49.66 British pence from 49.62 pence. It declined to 4.7943 Chinese yuan from 4.8170 yuan yesterday.