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Kiwi little changed despite dairy boost

NZ Newswire logoNZ Newswire 21/03/2017 Paul McBeth
New Zealand coin is arranged for a photograph in Wellington, New Zealand © Mark Coote New Zealand coin is arranged for a photograph in Wellington, New Zealand

The New Zealand dollar is little changed as prices for dairy products unexpectedly rose at the latest auction despite an increase in supply, while US equities and the greenback were weighed on by uncertainty over whether legislators will approve an overhaul to US healthcare cover.

The kiwi traded at US70.42 cents as at 8am on Wednesday from US70.47c on Tuesday. The trade-weighted index was at 76.32 from 76.46.

Whole milk powder prices rose 2.9 per cent to $US2855 a tonne at the GlobalDairyTrade auction. Analysts had been expecting a decline based on pricing in the futures market. That comes ahead of Fonterra's first-half earnings result, with the world's biggest dairy exporter expected to give an update on their perceptions of the market.

A wet spring sapped agricultural production in the December quarter, although economists have said indicators are pointing to a rebound in the first three months of this year.

"The prices for New Zealand's commodities that make up roughly 60 per cent of total goods exports are holding up better than expected. This is highlighted by the positive dairy auction overnight," ANZ agri economist Con Williams said in a note.

"This should be supportive of New Zealand's terms of trade remaining at historical highs, and alongside the broader economic story, be NZD supportive."

The US dollar index fell 0.7 per cent and stocks on Wall Street were lower as investors weigh up whether US President Donald Trump will be able to convince legislators to amend the Affordable Healthcare Act, known as Obamacare, freeing up funds for the White House to embark on tax reform.

On Wednesday morning, the kiwi fell to 78.80 yen from 79.45 yen and declined to 4.8498 Chinese yuan from 4.8673 yuan. It declined to 65.17 euro cents from 65.51c and decreased to 56.42 British pence from 56.98p. The local currency was little changed at 91.40 Australian cents from A91.37c.

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