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Kiwi gains on US dollar weakness

NZN 6/06/2017 Rebecca Howard

The New Zealand dollar extended its gains against a broadly weak US dollar and rose against the Aussie on Tuesday after Australia's first quarter current account data disappointed investors and the Reserve Bank of Australia kept interest rates on hold.

The kiwi rose to US71.56c as at 5pm from 71.34c at 8am and 71.18c Monday. The trade-weighted index rose to 76.98 from 76.53 on Friday, before the three-day Queen's Birthday public holiday.

The New Zealand dollar - which got a strong weekend lift after surprisingly weak US employment data on Friday - gained further ground as escalating tensions in the Middle East, the impending testimony of a former US FBI director, British elections and a European Central Bank meeting this week, all took their toll on the greenback in Asian trading.

"It is still elevated, mainly because the US dollar has been weak and that really stems from last Friday's payrolls surprise," said Westpac Bank senior FX strategist Imre Speizer.

He said it got a further lift against both the Australian dollar and the US dollar when the "Aussie fell on their current account number, which was pretty bad".

The kiwi rose to A95.53c from 95.37c Monday.

Australia's current account deficit was A$3.1 billion deficit or more than six times the A$500 million deficit expected by economists, which weighed on the Aussie.

The kiwi has been benefiting from optimism the local economic outlook favours the kiwi over its trans-Tasman counterpart. Several economists are now speculating that parity may be back on the cards at some point down the track.

The kiwi rose to 63.53 euro cents from 63.19 cents and traded at 55.37 British pence from 55.31 pence. The kiwi was at 78.66 yen from 78.70 yen and gained to 4.8656 yuan from 4.8422 yuan.

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