NZ dollar up on good dairy auction news

The kiwi dollar rose to 63.39 euro cents overnight. Photo / File

The New Zealand dollar gained as a strong GlobalDairyTrade auction added to positive sentiment about the local economy and trader await a speech to manufacturers and exporters from Reserve Bank governor Graeme Wheeler.

The kiwi dollar rose to 84.87 US cents from 84.37 cents at 5pm in Wellington yesterday. The trade-weighted index rose to 77.06 from 76.77.

The local currency has recorded a volatile 24 hours on the back of dairy news, having been sold off yesterday after reports China had destroyed branded New Zealand dairy products. Fonterra subsequently said its products weren't affected.

The global backdrop was broadly positive for the kiwi, with gains in equity markets in Europe and the US. Wheeler's speech notes for the closed briefing today are to be released at 3:30pm local time.

"The dairy auction overnight was rock solid and that accentuated the gains" in the kiwi, said Alex Sinton, senior dealer at ANZ New Zealand. "If things are ticking over in New Zealand that could well be better than what's happening in other places in the world."

The New Zealand dollar may trade in a range of 84.60 US cents to 85.10 cents today, he said. The currency fell as low as 84.02 cents when the Chinese dairy reports emerged yesterday, causing some investors to short the currency and exacerbating the move higher when the reports were put in context, he said.

The kiwi strengthened to 79.19 yen from 79.08 yen even as Japan's currency strengthened against the greenback on reports of a rift between politicians and Bank of Japan officials. Sinton said 79.40 yen is a key level to watch for the kiwi, just shy of the 10-year moving average of 70.50 yen.

The New Zealand dollar jumped to 55.01 British pence from 54.56 pence and rose to 63.34 euro cents from 63.22 cents. It gained to 81.89 Australian cents from 81.72 cents.