Kiwi dollar falls against greenback

The kiwi traded at 68.43 US cents. Photo / File

The New Zealand dollar fell against a broadly stronger greenback after the US Senate approved tax reforms that analysts say could boost the world's biggest economy by 0.3 per cent next year.

The kiwi traded at 68.43 US cents as at 8am in Wellington from 68.59 cents late yesterday. The trade-weighted index was at 72.24 from 72.38 yesterday.

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Tax cuts are expected to stoke a US economy that's already travelling at a fast enough pace to give the Federal Reserve reason to hike interest rates again this month. The Senate now has to align the legislation with a version of the reforms already approved by the House of Representatives before it heads back to President Donald Trump for final sign-off. In New Zealand today, traders will be watching for acting Reserve Bank governor Grant Spencer's speech titled 'Low inflation and its implications for monetary policy', with the local central bank well behind the Fed in its cycle.

Optimism about tax cuts has helped offset negative sentiment from the ongoing probe into contact between Trump's campaign team and Russian diplomats and the president's tweets critical of the FBI.

"With markets deciding to focus on the positive boost to growth from US tax reform and ignore other political rumblings the NZD/USD could see support tested," said Con Williams, rural economist at ANZ Bank New Zealand, in a note. "The RBNZ's governor speech today is likely to reinforce an on hold view too."

Also on the radar today is building work for the third quarter and the ANZ commodity price index for November. Also during Asia's day will be China's Caixin PMI for November and in Australia, retail sales and trade data, and the Reserve Bank of Australia's review of interest rates (expected to remain on hold).

The kiwi was at 90.10 Australia cents from 90.18 cents yesterday. The New Zealand dollar fell to 50.78 British pence from 50.90 pence yesterday even after the pound fell on a trade-weighted basis after European Commission president Jean-Claude Juncker and British PM Theresa May failed to reach accord on a Brexit deal.

The kiwi traded at 57.75 euro cents from 57.78 cents, fell to 77.13 yen from 77.31 yen and declined to 4.5290 yuan from 4.5352 yuan.