NZ dollar firms after government's 'wellbeing' budget

The kiwi was trading at 65.24 US cents at 5pm.

The New Zealand dollar rose a little after the Labour-led government's "wellbeing" budget forecast fiscal surpluses will be smaller as spending ramps up.

The kiwi was trading at 65.24 US cents at 5pm in Wellington from 65.11 at 7:50am. The trade-weighted index was at 71.98 points from 71.90.

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"All up, the Treasury's budget update forecasts show the government's books are expected to remain in good shape over the next four years," ANZ Bank economists say.

"Government spending has been bumped up on both the operational and capital side. This means smaller surpluses and higher debt, but all within, or at, the limits of the government's fiscal targets."

Mike Shirley, a dealer at Kiwibank, says the currency reacted only marginally: "The budget news saw a bit of movement but within a 10-point band."

Investors are still talking about the possibility that China may retaliate to the United States' move to increase tariffs by banning exports of rare earth metals to the US.

China accounts for about 80 per cent of the world's supply of a group of metals used in everything from electric car motors to smartphones. A ban would hurt many US companies.

"The market has focused on it as a reason to be concerned," Shirley says.

Coming up overnight, New Zealand time, US data, including an update on March quarter GDP and home sales figures, could move the market.

Otherwise, traders are focused on the Reserve Bank of Australia's next monetary policy statement due on Tuesday.

"The market has fully priced in a cut" in the RBA's cash rate to 1.25 per cent, Shirley says.

The New Zealand dollar was at 94.07 Australian cents from 94.12, at 51.62 British pence from 51.56, at 58.54 euro cents from 58.48, at 71.53 yen from 71.37 and at 4.5065 Chinese yuan from 4.5016.

The New Zealand two-year swap rate edged up to 1.4592 per cent from 1.4477 yesterday while the 10-year swap rate rose to 1.9625 per cent from 1.9250.