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Kiwi drifts off high as Trump reveals cuts

NZ Newswire logoNZ Newswire 23/05/2017 Paul McBeth

The New Zealand dollar has drifted off a month-high as US President Donald Trump unveiled plans to cut government spending, easing some nerves about the White House's ability to press ahead with reforms.

The kiwi rose as high as US70.46 cents and traded at US70.01c as at 8am on Wednesday from US70.19c on Tuesday. The trade-weighted index was unchanged at 75.80.

Stocks on Wall Street and the US dollar index rose after Trump announced plans to strip $US3.6 trillion from government spending over the next decade with the biggest cuts targeted at the Medicaid healthcare programme.

The greenback has come under pressure in recent weeks as investors questioned whether Mr Trump would be able to proceed with his planned tax reform and infrastructure programme after getting bogged down in political scandal.

That comes ahead of Fonterra's opening forecast for the upcoming season, which is expected to be at least $6 per kilogram of milk solids and may also include an increase for the current season as global dairy prices remain strong.

"The NZD has positive momentum as it eyes a likely firm first milk price forecast from Fonterra for the 2017/18 season of at least $6 (possibly out today, or maybe tomorrow) and tomorrow's government budget revealed a healthy set of fiscal accounts," BNZ economist Doug Steel said in a note.

On Wednesday morning, the kiwi traded at 54 British pence from 54.02p on Tuesday, rose to 62.60 euro cents from 62.37c and gained to 78.23 yen from 78.01 yen.

It slipped to 4.8195 Chinese yuan from 4.8346 yuan and lowered to 93.58 Australian cents from 93.60c.

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