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NZ dollar gains as risk indicators improve

NZ Newswire logoNZ Newswire 2/05/2017 Jonathan Underhill

A new $10 note. © Mark Tantrum/Getty Images A new $10 note. The New Zealand dollar rose on Tuesday, ending a five-day decline, as traders' risk appetite picked up.

This came even though the US Federal Reserve's policymakers' meeting and key US labour market data due out may yet indicate a stronger US economy.

The kiwi dollar rose to US69.18c at 5pm in Wellington from 68.56 cents late Monday. The trade-weighted index rose to 74.99 from 74.51.

The Chicago Board Options Exchange Volatility Index (VIX), known as Wall Street's fear gauge, fell as low as 9.56 overnight, the lowest since early 2007.

Both the kiwi and the Australian dollars rose overnight, with the Aussie briefly adding to its gains after the Reserve Bank of Australia kept its cash rate unchanged, as expected.

"We've seen a few short-term risk-on flows," said Mitchell McIntyre, a dealer at HiFX.

"But the trend is still certainly down in terms of the kiwi. The US dollar is still trending higher and commodity prices are still looking soft."

Little change is expected for dairy prices at the latest GlobalDairyTrade auction overnight although Mr McIntyre said a poor auction could weigh on the kiwi if it has drifted back under US69c by then.

Whole milk powder prices have surged 25 per cent since early March.

Meanwhile, New Zealand labour market data is due out on Wednesday and is expected to show employment growth in the first quarter and a strong participation rate of above 70 per cent.

The kiwi traded at A91.66c from 91.62 cents late Monday and rose to 4.7672 yuan from 4.7231 yuan. The local currency rose to 77.378 yen from 76.53 yen and gained to 63.37 euro cents from 62.94 cents. It rose to 53.63 British pence from 53.10 pence.

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