Kiwi slips as spotlight falls on Brazil

The Kiwi dollar surged to 2.3192 real from 2.1743 real on Thursday. Photo / File
The Kiwi dollar surged to 2.3192 real from 2.1743 real on Thursday. Photo / File

The New Zealand dollar fell, and is heading for a 0.4 per cent weekly decline, as a scandal surrounding Brazil's President Michel Temer took the spotlight off US President Donald Trump and US data printed strong enough to keep intact bets on a US rate hike next month.

The kiwi dollar fell to US68.89c from US69.28c late on Thursday. The trade-weighted index fell to 74.75 from 75.06 on Thursday.

Among the recent evidence the US economy is strong enough to warrant higher interest rates, the Philadelphia Fed business outlook index for May jumped to 38.8, about twice the 18.5 level estimated by economists, while a Reuters poll revised up the forecast for US GDP in the second quarter. Separately, Loretta Mester, president of the Federal Reserve Bank of Cleveland, said the Fed needed to keep raising rates if economic conditions continue as expected and also should begin the process of shrinking its balance sheet.

"If quantitative easing debased the US dollar then quantitative tightening should have the opposite effect," said Mark Johnson, senior dealer at OMF.

"The market has pretty much priced in that the Fed will hike in June."

Fed funds futures are pricing in a 70 per cent chance that the Federal Reserve will raise interest rates in June.

The Brazilian real tumbled on allegations President Temer condoned bribery payments to a witness in a corruption probe. Temer has vowed not to resign.

The Kiwi dollar surged to 2.3192 real from 2.1743 real on Thursday.

Reports about Temer almost pushed Trump off the front pages. Speculation has mounted about the risks to US President Donald Trump of the ongoing Federal Bureau of Investigation probe into links between his team and Russian officials ahead of the election and Trump's subsequent sacking of FBI director James Comey.

The kiwi didn't move much after figures showed net migration remained at record levels in April, while short-term visitors also charted a new high.

The New Zealand dollar was little changed at A92.775c from A92.86c. The kiwi slipped to 61.99c from 62.17c and fell to 53.17p from 53.42p. It dropped to 76.72 from 77.01 and declined to 4.7480 yuan from 4.7745 yuan on Thursday.

- BusinessDesk

Get the news delivered straight to your inbox

Receive the day’s news, sport and entertainment in our daily email newsletter

SIGN UP NOW

© Copyright 2017, NZME. Publishing Limited

Assembled by: (static) on production apcf03 at 30 May 2017 17:15:53 Processing Time: 29ms