NZ dollar at 2 week high, weak US growth hits greenback

The New Zealand dollar rose to a two-week high after figures showed the US economy grew less than expected in the second quarter while some economists are becoming more bullish about the domestic economy.

The kiwi traded at 71.96 US cents as at 8am in Wellington, from 72.13 cents in late New York trading on Friday and up from 70.88 US cents in Asia at the end of last week.

The trade-weighted index was at 76.43, up from 75.74 in Wellington on Friday and well above the 71.6 average the Reserve Bank has projected for the third quarter.

US gross domestic product rose at an annualised rate of 1.2 percent in the second quarter, undershooting the 2.5 percent forecast in a Bloomberg survey and keeping intact expectations the Federal Reserve won't be in a hurry to raise interest rates this year.

By contrast, economists at UBS say the New Zealand economy probably continued to grow at an annualised pace of 3.3 percent in the second quarter and they lifted their 2016 growth forecast to 2.7 percent from 2.3 percent last Friday.

"New Zealand's strong relative economic performance and the lack of support for US monetary policy tightening suggest that the 'stronger-for-longer' NZD theme is likely to prevail, with New Zealand rate cuts doing little to prevent that outcome," said Jason Wong, currency strategist at Bank of New Zealand.

Fonterra Cooperative Group announces its milk payout forecast today and traders will be looking for any sign that there's a pick-up expected for dairy prices.

The kiwi traded at 73.51 yen from a three-week low of 73.10 yen in Wellington on Friday.

The local currency traded at 94.66 Australian cents from 94.75 cents in New York on Friday and fell to 4.7727 yuan from 4.7840 yuan.

It slipped to 64.33 euro cents from 64.44 cents on Friday in New York and decreased to 54.31 British pence from 54.45 pence.