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NZ dollar falls as dairy auction looms

NZ Newswire logoNZ Newswire 16/05/2017 Paul McBeth
A new $10 note. © Mark Tantrum/Getty Images A new $10 note.

The New Zealand dollar fell on Tuesday while continuing to trade in a narrow range.

This came as investors brushed off heightened uncertainty around North Korea and the Trump administration in the US and pushed stocks on Wall Street to new highs.

Investors will be watching the GlobalDairyTrade auction overnight where the price of whole milk powder is expected to decline, according to futures pricing on the NZX.

The kiwi traded at US68.61c as at 5pm in Wellington from 68.76c at 8am and 68.73c Monday. The trade-weighted index was at 74.86 from 74.88.

The Chicago Board Options Exchange's Volatility Index, known as Wall Street's 'fear gauge', is sitting near its lowest level in 10 years, while stock benchmarks on Wall Street have climbed to record highs.

It is seemingly unperturbed by North Korea's hostile posturing and persistent questions about US President Donald Trump's ability to press ahead with major tax reform, new trade policies and an expanded infrastructure spend.

"Given where things are going in North Korea and with Trump sacking people and looking at sacking more people, there's a lot of uncertainty," said Michael Johnston, senior trader at HiFX in Auckland.

"The market is complacent and underpricing the potential for a major movement."

Mr Johnston said the kiwi dollar may push higher in the short term but will find it hard to break above US70c, and he still expects the currency to decline over the longer term.

The local currency was little changed at A92.84c from 92.85c Monday.

The kiwi traded at 53.29 British pence from 53.25 pence Monday and declined to 62.59 euro cents from 62.86 cents. It edged up to 78.09 yen from 77.91 yen and traded at 4.7417 Chinese yuan from 4.7417 yuan.

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