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Kiwi enjoys oil recovery

NZ NewswireNZ Newswire 18/04/2016 Tina Morrison

The New Zealand dollar has touched its highest level in more than two weeks after oil prices recovered ground following a slump when oil producers failed to reach agreement on freezing production to bolster prices.

The kiwi hit US69.57 cents and was trading at US69.46c at 8am on Tuesday in Wellington, from US69.21c at 5pm on Monday. The trade-weighted index was little changed at 73.08 from 73.06.

Currencies linked to commodities, such as the kiwi, Aussie and Canadian dollars, advanced after oil recovered ground, boosting investor appetite for higher risk assets.

Oil prices slumped almost 7 per cent on Monday after major oil producers couldn't agree at a meeting in Doha on limiting output, disappointing traders who had bet on a deal being reached.

"Oil recovered - you got this big overshoot and then it regathered," said Westpac's Imre Speizer.

"The post-Doha oil reaction was a very short-term thing and the signal of don't panic from oil filtered over into equities and currencies."

In New Zealand on Tuesday, the BNZ-BusinessNZ Performance of Services Index is scheduled for release at 10.30am.

Overnight, the focus will be on the GlobalDairyTrade auction.

Mr Speizer said he expected prices for whole milk powder, New Zealand's key product, would advance 3.5 per cent.

Elsewhere, Australia's Reserve Bank releases the minutes of its last meeting and RBA governor Glenn Stevens is scheduled to speak at a Credit Suisse conference in New York.

On Tuesday morning, the New Zealand dollar fell to 89.61 Australian cents from A90.18c and slipped to 48.67 British pence from 48.83p. It advanced to 61.41 euro cents from 61.31c, gained to 75.57 yen from 74.76 yen and rose to 4.4952 yuan from 4.4838 yuan.

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