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NZ dollar climbs as budget beckons

NZ Newswire logoNZ Newswire 23/05/2017

New Zealand currency © Getty Images New Zealand currency The New Zealand dollar rose above US70c for the first time in about a month on Tuesday on expectations this week's budget will paint an upbeat picture of the domestic economy at a time political uncertainties have weighed on the greenback.

The kiwi rose to US70.19c as at 5pm in Wellington from 69.36c late Monday.

An explosion at a concert in Manchester, England, that left 19 dead and almost 60 injured had little impact on currency markets even though police are treating the incident as a terrorist incident.

Instead, traders have been looking ahead to the release of the minutes of the last Federal Reserve policy meeting and the New Zealand budget on Thursday.

The kiwi last traded above US70c on April 25 and has broken through key resistance levels.

"It's hard to paint a negative kiwi story right now," said Philip Borkin, senior economist at ANZ Bank New Zealand.

"Domestic factors in New Zealand still look good."

By contrast, the US dollar is still vulnerable to political uncertainty in the US, including the Federal Bureau of Investigation's probe into links between people who had worked on Donald Trump's election campaign and the Russian government. The US dollar index has fallen to its lowest level since November last year.

ANZ Bank economists said in a preview of New Zealand's Budget 2017 that it would "print some rosy fiscal numbers with rising surpluses and declining debt" and that "solid growth is a key drive.".

It expects the Treasury will project annual economic growth to average 3 per cent over its forecast horizon, with stronger inflation.

The kiwi rose to 62.37 euro cents from 61.97 cents late Monday. It rose to 54.02 British pence from 53.36 pence.

The local currency gained to 78.01 yen from 77.33 yen and gained to 4.8346 yuan from 4.7774 yuan. It rose to A93.60c from 93.21c.

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