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Kiwi tops US72 cents on improved sentiment

NZ Newswire logoNZ Newswire 6/06/2017 Jonathan Underhill

The New Zealand dollar has risen above US72 cents for the first time since the beginning of March as the nation's relatively robust economic growth story lifted sentiment.

The kiwi rose to US71.87c as at 8am on Wednesday in Wellington, and earlier touched US72.05c, from US71.56c late Tuesday. The trade-weighted index rose to 77.24 from 76.98.

The GDT price index rose 0.6 per cent in the GlobalDairyTrade auction overnight to $US3395, marking the sixth consecutive gain, although whole milk powder fell. It was just one of a number of positive indicators for New Zealand including terms of trade rising to a 44-year high in the first quarter, driven by prices of dairy and forest product exports.

Business confidence rose in May, as did New Zealand commodity prices. By contrast, data on Friday showed the US economy isn't adding jobs as fast as expected.

"The NZD should be elevated, with the recent strength in part driven by local fundamentals (such as the terms of trade) and fading policy-related support for the USD," said ANZ Bank rural economist Con Williams.

"Despite that combination, we're coy chasing the NZD around current levels."

Traders on Wednesday will be watching for first quarter manufacturing sales but also keeping an eye out for Australia's first-quarter gross domestic product, expected to show their economy slowed to a 0.3 per cent pace of growth from 1.1 per cent in the fourth quarter last year.

In the morning, the kiwi rose to 95.67 Australian cents from A95.53c late Tuesday and has gained 5.5 per cent from its low in mid-March, prompting some strategists to ponder whether the kiwi has a chance of reaching parity with its Australian counterpart.

It rose to 63.69 euro cents from 63.53c and gained to 55.65 British pence from 55.37p. It also traded at 78.62 yen from 78.66 yen and gained to 4.8771 yuan from 4.8656 yuan.

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