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NZ dollar up as business confidence grows

NZN 31/05/2017 Jonathan Underhill

The New Zealand dollar rose on Wednesday as a pick-up in business confidence and stronger-than-expected Chinese manufacturing data added to positive sentiment for the kiwi.

The kiwi dollar traded at US70.85c as at 5pm in Wellington, and earlier touched 71.17c, from 70.46 US cents late Tuesday.

China's National Bureau of Statistic's official Purchasing Managers' Index (PMI) beat estimates at 51.2 this month, showing no drop-off from April, amid strong activity in the steel sector, while that nation's services sector also showed a pick-up in activity.

The Chinese figures were released around the same time as the ANZ Business Outlook, which showed New Zealand firms became more confident this month and predicted higher profits and inflation.

Meanwhile, the Reserve Bank's financial stability report, which doesn't typically move markets, added to positive sentiment by saying risks had abated in the past six months.

"There's been a continuing stream of news supporting the kiwi, and at the same time a weakening US dollar," said Imre Speizer, senior market strategist at Westpac.

Mr Speizer's one-week outlook is for the kiwi to move into a higher trading range of US71c to 72c and he said the currency "can go higher still this week".

The kiwi rose above US71c for the first time since early March overnight in the face of weak US data and ran up again with the Chinese PMI and confidence survey.

The kiwi rose to Australian 95.09 cents from 94.88c late Tuesday. The kiwi traded at 63.41 euro cents from 63.33 cents and rose to 4.8423 yuan from 4.8283 yuan. It rose to 55.28 British pence from 54.99 pence and rose to 78.62 yen from 78.12 yen.

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