The New Zealand dollar fell as local economic growth met market expectations, while a more upbeat Federal Reserve signalled steeper interest rate increases as the world's biggest economy shows more signs of life.
The kiwi fell to 85.24 US cents at 5pm in Wellington from 85.51 cents at 8am and 86.21 cents yesterday. The trade-weighted index declined to 79.88 from 80.22 yesterday.
New Zealand's economy grew 0.9 percent in the three months ended Dec. 31, led by an expanding manufacturing sector, according to Statistics New Zealand. That was largely in line with market expectations, leaving traders to mull over the impact of the Fed's more optimistic view of the US economy. The Fed raised its projections for interest rate hikes next year, spurring demand for the greenback.
"You'll get more exaggerated moves (from local data) from lower numbers than higher numbers in these key releases because of how much good news is fully price in the kiwi," said Alex Hill, head of dealing at HiFX in Auckland. "The US dollar had a good move, and in the short-term things are really down to them - everyone's back on the tapering theme with the focus back on US data."
HiFX's Hill said the kiwi has settled very quickly into a new range between 84.50 US cents and 86.50 cents.
