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NZ dollar gains with dairy prices as US votes

Wednesday 7th November 2012

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The New Zealand dollar rose after prices gained in Fonterra's latest sale of dairy products, the nation's biggest export, and as America votes for the next president of the world's biggest economy.

The kiwi dollar rose to 82.84 US cents from 82.61 cents at 5pm in Wellington yesterday. The trade-weighted index rose to 74.09 from 73.94.

Prices of dairy products rose 1.1 percent in Fonterra's latest GlobalDairyTrade auction, the second straight gain on the sales platform. The auction comes after the ANZ Commodity Price Index rose for a third straight month in October, with cheese up 4 percent while butter and milk powders rose 3 percent. Prices also rose in New Zealand dollars as the currency firmed.

"The strengthening dairy prices add to the case that the NZD/USD will remain supported at historically high levels," Bancorp Treasury Services said in its morning note.

As American's vote, the race between President Barack Obama and challenger Mitt Romney is too close to call. Shares rose in the US and the greenback declined against most major currencies as the vote got underway.

"Currency markets continue to be fairly subdued as voting in the US election is underway," said Kymberly Martin, market strategist at bank of New Zealand. "With voting in the US election underway the outcome is still a close call. Results will trickle out during our day."

The kiwi dollar traded at 79.3 Australian cents from 79.23 cents late yesterday, having tumbled when the Reserve Bank of Australia unexpectedly kept its cash rate unchanged at 3.25 percent.

The New Zealand dollar traded at 64.61 euro cents from 64.56 cents and rose to 51.73 British pence from 51.69 pence.

It rose to 66.6 yen from 66.17 yen after a Bank of Japan official said his bank's new unlimited lending program may further weaken the yen, according to Bloomberg.

BusinessDesk.co.nz

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