* New Zealand dollar slides on dovish tilt
* Greenback nudges lower as yields sink
* Euro headed for worst week since mid-December
* Graphic: World FX rates in 2016 tmsnrt.rs/2egbfVh
By John Geddie
LONDON, Feb 9 The New Zealand dollar was by far
the biggest faller among major currencies on Thursday, down
almost a full percentage point after its central bank kept rates
on hold and said any tightening might be at least two years
In week which has seen the U.S dollar find a firmer footing,
the greenback was down a tad as lingering risk aversion pinned
U.S. bond yields near multi-week lows.
Meanwhile political risks, most notably France's upcoming
election, kept the euro stuck below $1.07 with the single
currency headed for its worst week in nearly two months.
But the kiwi stole the show for G10 markets, with a dovish
steer from the central bank catching investors off guard despite
rates being as expected left unchanged at 1.75 percent.
"The RBNZ surprised a market priced for rate hikes by
retaining a mild easing bias," said Adam Cole, head of G10 FX
Strategy at RBC.
Cole said economists at RBC continue to expect a 25 basis
point cut in rates this year, but that markets generally remain
skewed towards a hike.
The New Zealand dollar was down 0.8 percent at $0.7201
, pulling away from a three-month high of $0.7375 hit
earlier this week.
The Australian dollar suffered collateral damage and last
traded at $0.7615, down 0.4 percent on the day.
The dollar index against a basket of major currencies was
down 0.1 percent at 100.180, but well off a 2-1/2-month
low struck last week.
It gained 0.3 percent against a broadly weaker yen to
"We are now in a phase where downside risks to the dollar
has become predominant, with the drop in Treasury yields having
gained further momentum this week due to perceived European
political risks," said Junichi Ishikawa, senior forex strategist
at IG Securities in Tokyo.
The euro was little changed a touch below $1.07
but has shed around 0.8 percent against the dollar this week, on
course for its worst run since mid December.
A poll released Friday confirmed far-right leader Marine Le
Pen looks set to win the first round of France's presidential
election in April, with other polls indicating she will lose the
runoff to centrist Emmanuel Macron.
But in a sign of how far voting intentions have shifted,
Francois Fillon, a conservative who was favourite to win
election only two weeks ago but has seen his campaign damaged by
scandal, is now seen knocked out in the first round.
Analysts said the yen could be poised to recover some ground
should Trump reiterate his opposition to a strong dollar when he
meets Japanese Prime Minister Shinzo Abe at a two-day summit
starting on Friday.
"Trump may opt to take a tough stance against Japan amid the
perceived political chaos. Taking such a stance would also set
him up to talk tough with China," Ishikawa at IG Securities
Trump and his top trade adviser Peter Navarro criticised
Germany, Japan and China last week, saying the trading partners
were engaged in devaluing their currencies to the disadvantage
of the United States.
For Reuters Live Markets blog on European and UK stock
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(Additional reporting by Shinichi Saoshiro in Tokyo; Editing by