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Dollar dips as growing concerns in Europe bolster greenback

NZ dollar dips as growing concerns in Europe bolster greenback

By Paul McBeth

Oct. 18 (BusinessDesk) - The New Zealand dollar slipped against a stronger greenback amid concern lingering Brexit talks and Italy's projected budget deficits will slow growth in Europe.

The kiwi decreased to 65.59 US cents as at 8am in Wellington from 65.83 cents yesterday. It traded at 56.98 euro cents from 56.93 cents yesterday.

The US dollar index advanced 0.5 percent as European politics heightened volatility in financial markets. The European Union's chief Brexit negotiator Michel Barnier urged patience with negotiations unlikely to be completed this week. Meanwhile, the yield on Italy's 10-year bonds rose 3 basis points to 3.58 percent after European Commissioner Günther Oettinger said his personal opinion was that the regional bloc will probably reject Italy's draft budget.

Minutes to the US Federal Reserve's latest policy meeting also showed some debate among committee members on how to push interest rates higher. The yield on US 10-year Treasuries increased 2 basis points to 3.18 percent.

"The 66 US cent level capped the NZD’s attempts higher overnight," ANZ Bank New Zealand economists Miles Workman and Philip Borkin said in a note. "With risk sentiment jittery again and the USD strengthening, we see this level holding firm for now."

No local data is scheduled for today. Australian employment figures and a business confidence survey will be watched. The kiwi decreased to 92.15 Australian cents from 92.25 cents yesterday.

The US Treasury Department's semi-annual currency policy report is also in view to see whether China is called a currency manipulator. The US and China have been embroiled in a trade war this year, injecting uncertainty into markets as analysts assess what impact dwindling trade could have on global growth.

The local currency fell to 73.76 yen from 73.95 yen yesterday and decreased to 4.5423 Chinese yuan from 4.5573 yuan. It was unchanged at 49.97 British pence. The trade-weighted index was at 71.72 from 71.89 yesterday.

(BusinessDesk)

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