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NZ dollar heads higher as greenback dips

NZ NewswireNZ Newswire 2/05/2016 Tina Morrison

The New Zealand dollar rose above 70 US cents overnight as the US dollar weakened after US manufacturing activity slipped in April, raising concern about the pace of its economic recovery.

The kiwi gained to 70.09 US cents at 8am in Wellington, from 69.93 cents at 5pm on Monday. The trade-weighted index was unchanged at 73.53.

Many markets, including London, were closed on Monday for the May Day public holiday.

The US dollar index slumped to its lowest level since January 2015 after a report showed US factory activity expanded at a more moderate pace in April as new orders and production slowed amid a continued drawdown in inventories.

The Institute for Supply Management index of national factory activity slipped to 50.8 last month from 51.8 in March and below economist expectations.

A reading above 50 separates expansion from contraction in the manufacturing sector, which accounts for 12 per cent of the US economy.

"Markets noted that US manufacturing remains just above stall speed," said ANZ.

The local focus is the Reserve Bank of Australia's interest rate decision on Tuesday and traders have increased their bets for a 25 basis point cut to about a 50/50 chance.

The kiwi slipped to 91.45 Australian cents from 92 cents, after hitting a two-month high of 92.19 cents.

The local currency advanced to 74.61 yen from 74.54 yen, ahead of a three-day 'Golden Week' holiday in Japan starting on Tuesday.

The New Zealand dollar slipped to 47.78 British pence from 47.87 pence and fell to 60.84 euro cents from 60.97 cents.

It gained to 4.5381 yuan from 4.5271 yuan ahead of the release of April Chinese manufacturing data.

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