Kiwi dollar lifts as US interest rises slowly

The kiwi dollar rose to 61.44 euro cents from 61.01 cents on Thursday ahead of a speech by European Central Bank president Mario Draghi.

The New Zealand dollar is heading for a 0.6 per cent gain this week as the prospect of US interest rates grinding higher at a slower pace than expected took the sheen off a greenback that reached an eight-month high.

The kiwi was at US65.85c at 5pm yesterday from US65.44c a week ago in New York. It was at US65.92c at 8am yesterday, up from US65.31c on Thursday. The trade-weighted index increased to 71.36 from 71.15 on Thursday, and is heading for a 0.1 per cent increase this week.

A BusinessDesk survey of nine currency analysts predicted the kiwi would trade between US63.50c and US66.80c this week. Six expected it to drop, two said it would rise slightly, and one picked little change.

The local currency dropped against the greenback through the start of the week as the US dollar remained underpinned by growing bets the Federal Reserve will raise interest rates at next month's policy review and as global dairy prices fell for a third time at Fonterra's fortnightly GlobalDairyTrade auctions. However, it rallied on Thursday after minutes to the Federal Open Market Committee's October meeting didn't offer compelling evidence the Federal Reserve will hike rates aggressively, disappointing some traders who wanted a harder line and prompting them to trim their bets on further appreciation.

The Reserve Bank of New Zealand will review the official cash rate on December 10 and OMF's Michael Johnston said he expects governor Graeme Wheeler will cut rates next month to shore up the economy against extended weakness in dairy prices. New Zealand's two-year swap rate slipped one basis point to 2.72 per cent at 5pm yesterday, and 10-year swaps decreased one basis point to 2.6 per cent.

Traders will be closely watching the November US non-farm payrolls report early next month, which Johnston said will be a key piece of data for the Fed on whether it will start raising rates in December.

The kiwi rose to 61.44 euro cents from 61.01 cents on Thursday ahead of a speech by European Central Bank president Mario Draghi at the European Banking Congress in Frankfurt.

The local currency gained to 43.07 British pence from 42.73p on Thursday, and climbed to 80.94 yen from 80.45 yen. It increased to A91.45c from A91.19c on Thursday, and advanced to 4.2016 Chinese yuan from 4.1655.