The New Zealand dollar held near a two-month high after US factory orders beat expectations, helping lift equity markets and risk appetite.

The New Zealand dollar traded at 80.38 US cents just before 8am little changed from 80.40 cents at 5pm. The trade weighted index eased back to 72.46 from 72.53.

In the US, the world's largest economy, factory orders surprised with a bigger-than-expected jump in May. A Commerce Department report showed that orders to factories rose 0.7 per cent in May, surpassing expectations for a 0.1 per cent advance.

That helped advance stocks on Wall Street, with the Dow Jones Industrial Average rising 0.6 per cent in a shortened session ahead of the Independence Day holiday.


The factory orders "gave hope that the slowdown is coming out the other side," said Stuart Ive, currency strategist at HiFX.

The local currency pared an earlier gain after prices of dairy products fell 5.9 per cent in the latest GlobalDairyTrade auction, mirroring a broader decline in New Zealand's primary sector exports in the face of doubts about the strength of the world's economic recovery.

The auction comes a day after figures showed the ANZ Commodity Price Index, which measures a basket of New Zealand export commodities, fell to the lowest level in more than two years in June.

In May, Fonterra flagged the prospect of lower payments for 2013 in the face of weaker global commodity prices.

The results may weigh on the kiwi today, Ive said. "The local market was expecting it to be a positive number."

The kiwi dropped to 78.16 Australian cents at 8am from 78.34 cents. The Reserve Bank of Australia left its target cash rate unchanged at 3.5 per cent yesterday, even as it dimmed its international outlook.

The New Zealand dollar was little changed on 63.76 euro cents from 63.81 cents and was largely unchanged on 51.21 British pence from 51.19 pence. The kiwi rose to 64.17 yen from 64.08.