US dollar hovers near lows as kiwi climbs

London

THE US dollar on Wednesday hovered around the levels it has held for days, as investors awaited US jobs data for a guide on the outlook for interest rates.

The greenback has lost ground against major rivals after the US Federal Reserve in a policy statement at the end of July said the job market had "some ground to cover" before it eases stimulus.

But it is still up around 2 per cent overall since a Fed meeting in June, when the central bank flagged it was gearing up for sooner-than-expected rate hikes.

On Wednesday the US dollar index edged up 0.1 per cent, last at 92.109.

Investors will get a clue on the jobs situation later on Wednesday with the publication of the ADP employment survey, ahead of Friday's labour market report.

"The US labour market report on Friday is likely to be the highlight of this week for the markets," currency analysts at Commerzbank said in a note, adding ADP data would provide a foretaste, but was unlikely to significantly move the US dollar.

The US dollar was last broadly flat against the euro, after gains on data showing eurozone business activity surged in July, expanding at its fastest pace for 15 years.

The euro was last trading at US$1.18560.

The New Zealand dollar made strong gains for the second consecutive day, after a drop in unemployment in the country raised expectations rate hikes could begin within weeks.

The kiwi was last up 0.9 per cent against the US dollar, at US$0.70740.

The country's central bank had said on Tuesday it would soon begin consulting on ways to tighten mortgage lending standards, as it tries to control an inflated housing market.

"The heat we've been hearing and warning about regarding New Zealand's labour market has been borne out," said analysts at Bank of New Zealand.

"This surely removes any doubt about the (central bank) soon removing its foot from the accelerator." Against the yen, the US dollar traded near recent lows, last at 109.140.

Sterling edged up 0.1 per cent ahead of a Thursday Bank of England meeting, at US$1.39250. REUTERS