The kiwi stuck to a tight range ahead of the Brexit vote in the UK, helped by new China stimulus and a solid overnight milk auction.
The kiwi was trading at 68.06 US cents at 8am in Wellington, versus 68.38 cents at 5pm yesterday. The trade-weighted index was at 73.66 from 73.78.
Risk appetite got a lift when Chinese officials said they would step-up efforts to spur economic growth this year, amid signs that the country’s economic slowdown has deepened, Dow Jones Newswires reported. Beijing intends to improve credit availability for smaller companies, accelerate infrastructure investment and cut taxes, officials told a briefing Tuesday. China is New Zealand’s largest trading partner.
“Markets were calm ahead of the UK parliamentary vote on the Brexit withdrawal agreement, boosted by news that Chinese authorities will provide further stimulus through tax cuts.,” said ANZ Bank senior economist Liz Kendall in a morning note.
The kiwi was also supported by a 4.2 percent rise in overall prices in the latest GlobalDairyTrade auction. The average price was US$3,057 a tonne, compared with US$2,986 a tonne two weeks ago. Some 27,909 tonnes of product was sold, down from 28,651 tonnes two weeks ago. Whole milk powder advanced 3 percent to US$2,777 a tonne.
Dairy prices are starting to gain momentum on the back of lower seasonal offerings and the recent rapid reduction in government-held skim milk powder stocks in the European Union, said Kendall.
The main focus, however, is on the UK and the Brexit vote. According to Kendall, given the Brexit deal is widely expected to be defeated, the focus will be on the scale of the defeat. If the deal is defeated by 150 or more votes then pressure for Prime Minister Theresa May to step aside will be intense, she said. The vote is expected between 8:30-11am New Zealand time, she said.
The New Zealand dollar was at 53.49 British pence versus 53.00 British pence yesterday,
Against the Australian dollar, the kiwi was at 94.65 cents from 94.77. It was at 73.86 yen versus 73.23 yen, at 59.73 euro cents from 59.53, and at 4.6012 Chinese yuan from 4.6158.