The New Zealand dollar regained the ground shed after the shock resignation of Prime Minister John Key as traders await tonight's GlobalDairyTrade auction that's expected to produce another increase in milk powder prices.
The kiwi dollar rose to 71.35 US cents as at 8am in Wellington from 70.98 cents late yesterday. The trade-weighted index was little changed at 78.14 from 78.10.
The New Zealand dollar initially fell and stocks declined after Key's resignation yesterday, although little policy change may result if his preferred replacement, Finance Minister Bill English, wins the support of the National Party caucus to replace him next week.
The kiwi fell against the euro, having gained yesterday after Italian Prime Minister Italian Prime Minister Matteo Renzi said he would resign as a result of losing a referendum on constitutional reform, with the euro's weakness proving short-lived.
"After falling back below 71 cents from a high of 71.50 cents following the shock resignation of Prime Minister John Key the NZD has retraced the move and we open up this morning with the NZD retesting yesterday's highs," traders at HiFX said in a note.
Whole milk powder may rise 3.4 per cent, the fourth straight gain for New Zealand's key commodity export at tonight's dairy auction, based on pricing of NZX dairy futures. Prices for whole milk powder have picked up in the second half of this year after a prolonged slump, as demand and supply move back into balance.
Dairy companies including Miraka, Open Country Dairy and Westland Milk Products have joined Fonterra Cooperative Group in raising their payout forecasts in the wake of rising global dairy prices.
The kiwi fell to 66.21 euro cents from 67.34 cents late yesterday. It was little changed at 95.38 Australian cents ahead of the Reserve Bank of Australia's interest rate review today, which isn't expected to result in a change.
The kiwi rose to 4.9050 yuan from 4.8902 yuan, gained to 81.11 yen from 80.59 yen and advanced to 56.03 British pence from 55.90 pence.