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US dollar holds onto payrolls gains, NZ dollar rises after election
The US dollar held on to most of Friday’s gains after stronger-than-expected US jobs data lifted expectations of a Federal Reserve rate rise in December. The move matters because higher expected US interest rates can support the dollar against other currencies, even as concern about technology shares had recently weakened rate-rise bets.
The dollar index was steady at 102.20, after rising about 0.7 per cent on Friday; markets put the chance of a December rate rise at 79 per cent, up from 71 per cent a week earlier. The New Zealand dollar rose 0.4 per cent to US$0.5557 after a close election left the governing coalition with a preliminary 67 seats in a 131-seat parliament, just above the 66 needed for a majority. Nearly 15 per cent of votes remain uncounted, with official results due on 27 November.
In short
- Strong US jobs data boosted expectations of a December rate rise.
- The dollar held most of Friday’s gains.
- New Zealand’s currency rebounded as election counting continued.
Explained simply
The US dollar is the currency of the United States and is widely traded around the world. Its value can shift when investors change their expectations for US interest rates: higher rates can make dollar investments more attractive compared with those in other currencies.
The Federal Reserve, the US central bank, sets interest rates to help manage inflation and employment. New Zealand’s dollar is also traded internationally, and political uncertainty can affect how investors view the country’s economic outlook; elections decide which parties form its government.
Americas Elections Politics World