Dollar gains as greenback falls on weak US economic data

New Zealand's two-year swap rate increased one basis point to 2.65 per cent at 5pm in Wellington, and 10-year swaps rose one basis point to 3.46 per cent.

The New Zealand dollar advanced as weak US data stoked speculation the Federal Reserve will be cautious in hiking US interest rates further.

The kiwi gained to 64.69 US cents at 8am in Wellington, from 64.44 cents at 5pm yesterday. The trade-weighted index edged up to 71.01 from 70.91 yesterday.

The US dollar index, which measures the greenback against a basket of currencies, touched its lowest level in almost two weeks after US durable goods orders unexpectedly slumped 5.1 percent last month, raising concern about a weak US fourth-quarter gross domestic product report today and stoking speculation the Fed won't be in a hurry to raise interest rates further.

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Economists polled by Reuters had expected a 0.6 percent drop in orders. Commodity prices rose, buoying currencies tied to their fortunes, including the kiwi, Aussie and Canadian dollars.

The "big miss on US durable goods reflects weakness in manufacturing and oil, and bring more questions over path for the Fed," ANZ Bank New Zealand chief economist Cameron Bagrie and senior foreign exchange strategist Sam Tuck said in a note. "It all adds up to a Fed on hold for now. Weaker US durable goods and a continued unwind of global 'fear' helped to lift NZD/USD."

ANZ expects the kiwi to trade between 64.10 US cents and 65.60 cents today.
Building consent data for December is scheduled for release at 10:45am.

The New Zealand dollar slipped to 91.40 Australian cents from 91.56 cents yesterday, weakened to 58.99 euro cents from 59.14 cents, and dropped to 44.97 British pence from 45.24 pence. It advanced to 76.78 yen from 76.50 yen yesterday, and gained to 4.2530 yuan from 4.2382 yuan.