The New Zealand dollar extended its gains after stronger-than-expected third-quarter inflation and the first increase in whole milk powder prices in three GlobalDairyTrade auctions.
Whole milk powder on conveyor belt
Source: 1 NEWS
The local currency rose to 71.94 US cents as at 8:30am in Wellington from 71.85 cents late yesterday. The trade-weighted index edged up to 77.16 from 77.10.
The GDT price index rose 1.4 per cent to $US2,965 in the GDT auction, with whole milk powder rising 2.9 per cent to $US2,760 a tonne, a move broadly in line with expectations in the futures market.
The auction result added to upbeat sentiment for the kiwi, one of the strongest performing currencies in the past 24 hours, after figures yesterday showed inflation rose 0.2 per cent in the third quarter, against expectations of no change.
"(Inflation) was only marginally above consensus expectation, but the sharp move in the currency was likely exacerbated by positioning ahead of the release," said BNZ's Kymberly Martin.
"Upward momentum in the NZD/USD continued overnight, uninterrupted by a GDT dairy auction that threw up few surprises."
'Next eventual hiking cycle'
Traders are putting odds of a Reserve Bank rate cut on November 10 at 80 per cent, slightly lower than their bets ahead of the consumers price index release yesterday, amid speculation the central bank is nearing the end of its easing cycle.
"As the market starts to acknowledge the end of the rate cutting cycle its attention will turn to the next eventual hiking cycle," Ms Martin said.
The kiwi dollar rose to 93.80 Australian cents from 93.68 cents, slipped to 58.46 British pence from 58.76 pence, strengthened to 65.49 euro cents from 65.18 cents, climbed to 74.66 yen from 74.57 yen and rose to 4.8448 yuan from 4.8428 yuan.