SYDNEY, Dec 19 (Reuters) - The New Zealand dollar bounced from a one-week low on Thursday after the country’s third quarter economic growth came in stronger than expected while greenback traders awaited a vote to impeach U.S. President Donald Trump.
In Britain, the pound remained under pressure on rekindled fears of a chaotic exit from the European Union. It was last at $1.3077 after sliding nearly 2% in as many days.
The kiwi climbed to $0.6589 from Wednesday’s low of $0.6555 after New Zealand’s annual gross domestic product accelerated 2.7% in the third quarter against expectations for a 2.4% gain.
Risk sensitive currencies such as the kiwi and its Australian counterpart started December on a firm footing led by the apparent removal of two main risks dominating global markets: a preliminary U.S.-China trade deal and the election victory of U.K. Prime Minister.
However, fears have resurfaced this week. Despite the Sino-U.S. trade agreement, the spectre of a U.S.-led tariff war has not disappeared as traders await clarity on the deal.
The safe haven yen held in a tight range at 109.57 per dollar. It is mostly flat so far this month.
U.S. Trade Representative Robert Lighthizer said on Tuesday that the United States may raise tariffs on European goods as it tries to shrink its chronic trade deficit with the continent, re-igniting worries of the prospects of the export-driven euro.
The euro was last hovering around Wednesday’s trough of $1.1109 against the dollar, shrugging off a better-than-expected survey of German business morale.
“The most significant piece of news overnight has been the German December IFO survey, which... has shown evidence that the German economy may be in the process of pulling itself up by its boot straps,” said Ray Attrill, Sydney-based head of forex strategy at National Australia Bank.
“Improvement in the German – and broader Eurozone – economy – is fundamental to our expectation for a softer U.S. dollar and stronger Euro next year.”
A major headwind for the dollar was a vote in the U.S. House of Representatives on whether to impeach Trump later in the day. The Senate is expected to vote in January.
Despite the political uncertainty, an index that tracks the dollar against six major currencies jumped to a six-day high of 97.475.
Solid U.S. economic data in recent days have tamed expectations of any easing by the Federal Reserve in the near term, keeping the dollar stronger. Money markets are not pricing in a rate cut anytime soon.
The Australian dollar was a shade weaker at $0.6851 ahead of a monthly jobs report that could make or break expectations for another interest rate cut as early as February.
Markets will focus on interest rate decisions from the Bank of England and the Bank of Japan later in the day, with both seen unlikely to change policy.
Reporting by Swati Pandey; Editing by Sam Holmes