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Kiwi rises on optimistic GDT expectations

NZ Newswire logoNZ Newswire 17/10/2016 Jonathan Underhill

Kiwi rises on optimistic GDT expectations © LazingBee/iStock/Getty Images Kiwi rises on optimistic GDT expectations The New Zealand dollar rose on expectations that dairy prices will gain at this week's GlobalDairyTrade auction, snapping two consecutive declines for the nation's biggest export commodity.

The kiwi rose to 71 US cents as at 5pm in Wellington from 70.84 cents in late New York trading on Friday.

The trade-weighted index rose to 76.44 from 76.18.

NZX-traded dairy futures are pointing to an increase of about 7 per cent in prices at the GDT auction on Tuesday night, said Imre Speizer, senior market strategist at Westpac.

The gains are supply related, with unfavourable weather denting milk production in the North Island, but they are enough to underpin the kiwi short-term in the face of a stronger greenback and a widely expected rate cut by the Reserve Bank next month, he said.

"We've had two disappointing auctions. Breaking that run would put the market back in optimistic mode again," Speizer said.

"If we get that gain, we'll probably see a bit of a bounce in the kiwi."

Ahead of Tuesday night's dairy auction, Statistics New Zealand is due to release third-quarter inflation data on Tuesday.

The market expects a quarterly gain in the consumers price index of between zero and 0.2 per cent.

That's weaker than the Reserve Bank was projecting in its August monetary policy statement.

The kiwi didn't move much after the BNZ-BusinessNZ performance of services index declined to a seasonally adjusted 54.1 in September from an eight-month high of 57.9 in August.

That follows its manufacturing counterpart, the PMI, which rose to a seasonally adjusted 57.7 in September from 55.2 in August.

The kiwi dollar rose to 93.38 Australian cents from 93.06 cents.

The local dollar gained to 58.37 British pence from 58.10 pence on Friday in New York. It rose to 64.65 euro cents from 64.53 cents and climbed to 74 yen from 73.77 yen.

It strengthened to 4.7802 yuan from 4.7652 yuan.

New Zealand's two-year swap rate rose 1 basis points to 2.04 per cent, and 10-year swaps gained 4 points to 2.63 per cent.

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