The New Zealand dollar fell to a month low as the US dollar strengthened after Federal Reserve chair Janet Yellen's comments to Congress reiterated that interest rates may rise in December.
The kiwi touched 65.68 US cents, and was trading at 65.72 cents at 8am in Wellington, from 66.58 cents at 5pm yesterday. The trade-weighted index slid to 71.20 from 71.76 yesterday.
The US dollar index, which measures the greenback against a basket of currencies, jumped to a three-month high after Yellen told a congressional hearing on financial regulation that the Fed's upcoming December meeting was a "live possibility" for an interest rate hike. The US dollar was stronger even ahead of Yellen's testimony following upbeat data on the US services sector, while the New Zealand dollar was weaker after prices fell for a second GlobalDairyTrade auction and employment data printed softer than expected.
"That set the NZD on the back foot going into a night of broad US dollar strength," Bank of New Zealand senior market strategist Kymberly Martin said in a note. "The market now prices a 58 percent chance of a December hike. The Fed will become increasingly emboldened in its attempt to finally raise interest rates, if it sees that markets can remain resilient each time it mentions the potential of a December hike. "
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