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NZ dollar gains ahead of fiscal update

NZ Newswire logoNZ Newswire 7/12/2016 Jonathan Underhill
New Zealand coin is arranged for a photograph in Wellington, New Zealand © Mark Coote New Zealand coin is arranged for a photograph in Wellington, New Zealand

The New Zealand dollar rose ahead of a speech by Reserve Bank Governor Graeme Wheeler and before the government's fiscal and economic update, which may paint a more upbeat picture of the outlook.

The kiwi dollar rose to 71.45 US cents as at 8am in Wellington from 71.19 cents late on Wednesday. The trade-weighted index climbed to 78.29 from 78.17.

Mr Wheeler's speech, titled 'Some thoughts on New Zealand's Economic Expansion,' is to be released on Thursday morning.

He cut the official cash rate to a record low 1.75 per cent last month in what was seen as the last step of an easing cycle, with signs inflation will pick up this quarter.

Meanwhile, the Half-Year Economic and Fiscal Update is released later and will help set the stage for an election-year budget next May, although Finance Minister Bill English is expected to have become prime minister by then, handing the Treasury portfolio to his successor.

"With the looming vote for a new PM, focus will probably be more on the finance minister's delivery than the rosy fiscal accounts," BNZ's Jason Wong said.

The kiwi dollar fell to 95.57 Australian cents from 95.71 cents, having gained after figures showed the Australian economy shrank a greater-than-expected 0.5 per cent in the third quarter. The kiwi dollar rose to 56.62 British pence from 56.26 pence after figures showed British industrial production dropped 1.3 per cent in October, against expectations of a gain.

The local currency traded at 66.48 euro cents from 66.41 cents ahead of a meeting of the European Central Bank meeting at which President Mario Draghi may extend the ECB's bond purchase programme while hinting at its eventual end.

The kiwi rose to 4.9178 yuan from 4.9051 yuan and rose to 81.43 yen from 81.24 yen.

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