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Kiwi defies milk lift, hits three-week low

NZ Newswire logoNZ Newswire 4/04/2017 Jonathan Underhill

The New Zealand dollar has fallen, touching a three-week low, with gains in dairy prices doing little to halt a weakening trend for the currency.

The kiwi fell to US69.68 cents as at 8am on Wednesday in Wellington, and earlier touched a three-week low of US69.65c, from US69.87c late Tuesday. The trade-weighted index slipped to 75.87 from 75.93.

The aggregate price index rose 1.6 per cent in the GlobalDairyTrade auction overnight, while whole milk powder rose 2.4 per cent earlier on Wednesday.

However, the kiwi dollar barely reacted. Nor did it move much after Tuesday's Quarterly Survey of Business Opinion showed business remained upbeat in the first quarter, although optimism has waned.

The ANZ commodity price index for March is out at 1pm (NZT) and will show whether there is a broader trend for commodity price increases.

"Fundamental factors are not driving the currency at present, so maybe we shouldn't be that surprised to see the NZD lower on almost all the crosses, a continuation from the theme of March," said BNZ currency strategist Jason Wong.

The kiwi dollar has fallen from as high as US73.74c in early February, with the decline hastened by Reserve Bank governor Graeme Wheeler's reminder to the market that interest rates are expected to remain low for the foreseeable future.

Mr Wong said there is "strong technical support" for the kiwi if it falls below 69 US cents.

On Wedneday morning, the local currency traded at 92.07 Australian cents from A92.13c on Tuesday. It traded at 77.19 yen from 77.14 yen and fell to 4.7976 Chinese yuan from 4.8086 yuan. It declined to 65.29 euro cents from 65.45c and was little changed at 56.02 British pence from 56.01p.

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