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NZ dollar gains as greenback declines

NZ NewswireNZ Newswire 26/05/2016 Tina Morrison

The New Zealand dollar gained from a two-month low after weak US data on business spending dented demand for the greenback.

The kiwi touched a low of 66.90 US cents overnight and was trading at 67.47 cents at 8am in Wellington, from 67.16 cents at 5pm on Thursday. The trade-weighted index advanced to 72.66 from 72.31.

The kiwi was shunted lower on Thursday after Fonterra raised its opening farmgate milk price for next season by less than expected, stoking concerns about a third season of low prices for New Zealand's largest export commodity.

However, the local currency rebounded overnight as the US dollar weakened after government data showed core capital goods orders, a closely watched proxy for business spending plans, fell 0.8 per cent last month, marking the third consecutive monthly decline.

"Once commercial aircraft were stripped out from the US April durable goods data, business investment remained weak," ANZ Bank said.

Friday's focus will be on the second read of US first-quarter GDP and a speech by Federal Reserve chair Janet Yellen. ANZ said liquidity may be thin as markets close early ahead of the Memorial Day weekend in the US.

In New Zealand, Finance Minister Bill English and Prime Minister John Key will deliver post-budget speeches.

The New Zealand dollar advanced to 93.42 Australian cents from 93.12 cents, gained to 46.01 British pence from 45.64 pence, rose to 74.03 yen from 73.70 yen, and increased to 4.4220 yuan from 4.4033 yuan.

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