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NZ dollar gains as US manufacturing disappoints, no change seen from RBA

Tuesday 2nd April 2013

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The New Zealand dollar rose against the greenback after a measure of US manufacturing printed weaker than expected and as traders await the Reserve Bank of Australia's policy review, which may retain scope to cut interest rates.

The kiwi rose to 83.72 US cents from 83.52 cents in late Asian trading yesterday. The trade-weighted index was little changed at 76.83.

The US Institute for Supply Management's index of national factory activity dropped to 51.3 in March, against expectations in a Bloomberg survey that it would be little changed at 54. On Wall Street, the Standard & Poor's 500 Index fell 0.6 percent from a record high.

"The USD shed ground across the board last night after the March US ISM index disappointed expectations," said Richard Franulovich, a senior currency strategist at Westpac Banking Corp.

Gains in the New Zealand dollar will likely be capped at 84 US cents today, he said in a note.

Locally, the ANZ Commodity Price Index for March is due out today and will be followed by the results of the latest GlobalDairyTrade auction tomorrow. Dairy prices have spiked higher in the face of widespread drought, which prompted Fonterra Cooperative Group to raise its forecast milk payout last week.

Later today, Australia's central bank is scheduled to release its latest review of monetary policy. The bank is expected to keep its cash rate at 3 percent and Westpac's Franulovich says it will probably keep its "scope to cut" commentary.

The kiwi traded at 80.29 Australian cents from 80.31 cents yesterday. It slipped to 54.97 British pence from 55 pence and fell to 65.16 euro cents from 65.34 cents. The local currency dropped to 78.11 yen from 78.53 yen.


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