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NZ dollar pares overnight losses

NZN 20/06/2017 Rebecca Howard

The New Zealand dollar recovered some overnight losses after New York Federal Reserve President William Dudley signalled a willingness to gradually increase US interest rates to support economic growth.

However the local currency remained range-bound ahead of the overnight dairy auction and the upcoming central bank rate decision and statement Thursday.

The kiwi was trading at US72.46c as at 5pm in Wellington from US72.24c at 8am and from 72.78c Monday. It was at A95.32c from A95.12c at 8am.

"It has been a relatively quiet session. Overnight comments from the Fed's Dudley saw a stronger US dollar but from an Asian point of view it hasn't really gotten on with it," said Robert Rennie, chief currency strategist at Westpac.

Mr Dudley said he expects inflation to get back to 2 per cent as the US labour market tightens and drives up wages.

The kiwi continued to push higher against the yen after the Bank of Japan opted to keep its ultra-loose monetary policy unchanged last week.

Mr Rennie said given the current backdrop of strong but not too strong US data, equity market gains around the world, commodity markets having some strength coming through and an improvement in general risk sentiment, he is not surprised to see the kiwi gain against the yen.

The kiwi was trading at 80.93 yen from 80.76 yen Monday.

Looking ahead, he said investors will be watching for the results of the Global Dairy Trade auction later in the global trading day. NZX futures are pointing to a rise in whole milk powder prices of around 1 per cent.

The main event, however, will be the central bank's statement on Thursday.

Economists widely expect the bank to keep rates on hold at 1.75 per cent.

The kiwi was at 4.9498 Chinese yuan from 4.9570 yuan. It traded at 65.97 euro cents from 65.01 cents and 56.89 British pence from 56.96 pence.

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