NZ dollar under pressure from higher US dollar

December 22 - Close

The New Zealand dollar came under pressure from a rising US dollar today and did not get much of a lift from better-than-expected current account data for the September quarter.

The focus is turning to the gross domestic product report for the September quarter due tomorrow but even that may be overshadowed by the resurgent US dollar.

By 5pm the NZ dollar was at US70.32c from US70.65c at 8am and US71.04c at 5pm yesterday. It traded as low as US70.28c, a level not seen since late November.

The US dollar rose to a more than six-week high versus the yen as expectations the US economy is reviving encouraged investors to bet the Federal Reserve will raise interest rates sooner rather than later.

"We probably opened a bit higher than expected because the aussie dollar peeled off overnight quite aggressively," one dealer said

The NZ dollar "peaked up a bit" on the back of news that the annual current account deficit shrank to 3.1 per cent of gross domestic product from 8.4 per cent at the same time last year but economists did not see the improvement as sustainable.

"We didn't really go very far because the aussie dollar was under pressure at the time," one dealer said.

The NZ dollar rose to A80.07c from A79.92c at 5pm yesterday.

The NZ dollar was lower at 0.4919 euro from 0.4948 yesterday, and was little changed at 64.25 yen from 64.21. The trade weighted index was at 64.53 from 64.81 yesterday.

- NZPA