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NZ dollar lifts after dairy prices rise

NZ NewswireNZ Newswire 5/04/2016 Tina Morrison

The New Zealand dollar has risen after prices gained at the overnight GlobalDairyTrade auction, stoking optimism about the outlook for the country's largest export commodity.

The kiwi initially declined ahead of the dairy auction, slipping from 68.01 US cents at 5pm in Wellington on Tuesday to 67.67 US cents ahead of the release of the auction result before rebounding to 68.02 cents. It traded at 67.92 cents at 8am. The trade-weighted index advanced to 72.06 from 71.93.

The kiwi strengthened after dairy product prices for the second time in the seven auctions held so far this year. The GDT price index rose 2.1 per cent, while the average price for whole milk powder rose 1.5 per cent to $US2,013 a tonne.

"While the lift in dairy prices was broadly in line with futures market pricing, the New Zealand dollar still reacted, rising around a third of a cent against the US dollar," Westpac senior economist Anne Boniface said.

"Although last night's lift was small, any improvement in prices will be no doubt be welcomed by the embattled dairy sector," Ms Boniface said. "However ... a substantive recovery in prices is likely to be some way off yet. We expect prices to continue to bump around near current levels, before gradually grinding higher late from late 2016."

In New Zealand, state-owned Quotable Value is due to release its March housing data.

The New Zealand dollar advanced to 90.10 Australian cents from 89.31 cents, gained to 47.97 British pence from 47.70 pence. It fell to 74.90 yen from 75.40 yen, edged lower to 59.63 euro cents from 59.70 cents, and was little changed at 4.3985 yuan from 4.3988 yuan.

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