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Kiwi near highest in 4 months vs Aussie

NZ Newswire logoNZ Newswire 30/05/2017

<p>Figures from Australia have painted a gloomy picture for capital spending which has helped the New Zealand dollar reach 92.68 Australian cents.</p> © File image

Figures from Australia have painted a gloomy picture for capital spending which has helped the New Zealand dollar reach 92.68 Australian cents.

The New Zealand dollar traded near the highest levels in almost four months against the Australian dollar on Tuesday.

And it is expected to keeping pushing higher given the impact of falling commodity prices across the Tasman coupled with New Zealand's better economic outlook.

The kiwi traded at A94.88c as at 5pm in Wellington versus A94.83c at 8am and 94.95c late Monday. It has rallied from as low as 90.66c in mid-March. The local dollar fell to US70.46c from 70.67c.

"The Australian dollar is looking heavy and the real focus in the past couple of days has been on the kiwi/Aussie cross and what level it could reach," said Tim Kelleher, head of institutional foreign exchange sales at ASB Bank.

He noted there had been little trading activity due to holidays in the US, UK, China and Hong Kong but sliding commodity prices and the weaker outlook for the Australian economy versus the New Zealand economy meant parity "is looking more likely this time round".

The Aussie remained under pressure as oil prices retreated on lingering concerns about whether the extension of output cuts by OPEC and other producing countries will be enough to support prices.

Mr Kelleher said Australia may also be witnessing a cooling off in its housing boom as approvals for new projects sank 17.2 per cent on the year in April.

New Zealand residential building consents dropped 7.6 per cent in April but the slide had little impact on the market as Statistics New Zealand attributed the drop to the timing of the Easter public holiday.

Mr Kelleher said the main event risk for markets will be next month's likely rate increase by the US Federal Reserve. Against that backdrop, he said the kiwi would struggle to break through resistance at US71.50c "if we even get that high".

The kiwi traded at 63.33 euro cents from 63.28c. The kiwi fell to 4.8283 yuan from 4.8413 yuan. It was little changed at 54.99 British pence from 55.05 pence and fell to 78.12 yen from 78.68 yen.

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