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Dollar firms ahead of Powell testimony, housing measures hit Kiwi

The dollar crept back toward recent peaks this Tuesday morning as extended lockdowns in Germany and rising geopolitical tension turned investors cautious, while measures aimed at cooling New Zealand’s red-hot housing market hit the local dollar.

The Turkish lira was also wobbly but a roughly 1% drop was nothing like its 7.5% dive on Monday after President Tayyip Erdogan sacked a hawkish central bank chief, but markets’ relief was offset by worries about fresh lockdowns in Europe. The dollar was 0.1% lower against the safe-haven yen and a bit higher against nearly all other currencies.

The U.S. dollar index also rose 0.1% to 91.890. The kiwi hit a three-month low after the New Zealand government introduced taxes to curb housing speculation, a move some analysts said could reduce the need for monetary tightening and allow interest rates to stay lower for longer. The kiwi fell more than 1.2% and traded at $0.7074 late in the Asia session.

Kiwi bond yields fell, especially at the short end, and the Australian dollar was 0.8% lower at $0.7685. Sterling slipped about 0.2% to $1.3833 and oil linked currencies also fell with crude prices. The Canadian dollar hit a two-week low of 1.2557 per dollar.

Sisanda Mpiti.

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