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Kiwi extends gain on dairy rise

NZ Newswire logoNZ Newswire 2/05/2017 Jonathan Underhill

The New Zealand dollar has extended its gains after dairy prices rose more than expected in the latest GlobalDairyTrade auction and traders looked ahead to first-quarter labour market data.

The data, due on Wednesday moring, it expected to show steady employment growth and wage inflation.

The kiwi dollar rose to US69.34 cents as at 8am on Wednesday from US69.18c late Tuesday. The trade-weighted index rose to 75.20 from 74.99.

Dairy product prices advanced at the GlobalDairyTrade auction, increasing for the fourth consecutive time amid strong demand, with the GDT price index up 3.6 per cent from the previous auction two weeks ago.

"A further increase in global dairy prices has helped support the NZD," traders at HiFX said in a note. "Ahead of the latest dairy auction the NZD/USD had been threatening to push back below 0.6900 but rose sharply on the back of a fourth consecutive rise in dairy prices."

They said further direction of the kiwi will be dictated by the labour market figures. Employment growth is expected to have been 0.8 per cent in the first quarter, unchanged from three months earlier, while the jobless rate slipped to 5.1 per cent from 5.2 per cent.

"Anecdotes point to higher wage pressures developing, but we'll have to wait until later in the year to see that in the data," said BNZ currency strategist Jason Wong.

On Wednesday morning, the kiwi rose to 92 Australian cents from A91.66c on Tuesday after Australia's central bank kept its cash rate unchanged as expected. It gained to 4.7775 yuan from 4.7672 yuan and rose to 77.67 yen from 77.37 yen. It gained to 63.44 euro cents from 63.37c and traded at 53.58 British pence from 53.63p.

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