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NZ dollar falls ahead of milk auction

NZ Newswire logoNZ Newswire 21/02/2017 Rebecca Howard

© Rex Images The New Zealand dollar fell on Tuesday ahead of a possible slide in global milk prices in the overnight Global Dairy Trade auction.

The kiwi traded at US71.55 cents at 5pm in Wellington from US71.82c at 8am and US71.75c late Monday.

"It is just under a bit of pressure here ahead of the milk auction tonight," said OMF private client manager Stuart Ive.

He said the local currency started to slide after the Reserve Bank of Australia published its minutes from the February 7 rate review. The RBA said it judged "holding the stance of policy unchanged" would see inflation return to its 2 per cent to 3 per cent inflation target over time, according to the minutes.

It remained optimistic about the economy, with GDP growth expected to pick up to around 3 per cent in year-end terms later in 2017, and to remain above estimates of potential growth over the rest of the forecast period.

"Traders are keen to push the New Zealand dollar a bit further south against the Aussie ahead of the milk auction, which could show prices are up to 5 per cent lower based on the futures," said Mr Ive.

The kiwi was trading at A93.26 cents from A93.48c. Dairy product prices eked out a gain at the latest Global Dairy Trade auction, bucking expectations for a decline, as both whole and skim milk powder rose. The fortnightly auction tends to push the kiwi around given that dairy exports make up nearly a quarter of New Zealand's exports.

The local dollar slipped to 57.52 British pence from 57.78 pence Monday. The kiwi traded at 67.62 euro cents from 67.61c, was at 81.32 yen versus 81.16 yen and at 4.9255 yuan from 4.9264 yuan.

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