NZ dollar drifts lower following early boost from rising dairy prices

The New Zealand dollar eased a little, giving up some of the boost it received early today from the sixth successive increase in Global Dairy Trade auction prices.

The kiwi was trading at 68.72 US cents at 5pm in Wellington from 68.82 at 8am. The trade-weighted index was at 74.29 from 74.49.

"It's been a data-light day. The New Zealand dollar got a slight boost from the GDT auction showing slightly higher dairy prices on higher volume," says Peter Cavanaugh, the senior client adviser at Bancorp Treasury Services.

The headline GDT index rose 0.9 per cent to US$3,271 a metric tonne and a total of 25,324 tonnes was sold, up from 23,326 in the previous auction on Feb. 7.

Whole milk powder, a key price for Fonterra farmers, eked out a 0.3 per cent advance to US$3,022 a tonne.

"It then got another boost from US dollar weakness" after "very mixed risk signals" on the state of United States and China trade talks, Cavanaugh says.

According to Bloomberg, the US wants China to keep the value of the yuan stable, a move aimed at neutralising any effort by Beijing to devalue its currency to counter American tariffs.

The talks have moved to Washington this week after five days of negotiation in Beijing last week.

The kiwi drifted lower this afternoon, staying within a tight range with no information to provide a reason for moves in either direction, Cavanaugh says.

The New Zealand dollar is trading at 95.90 Australian cents from 95.98, at 52.59 British pence from 52.72, at 60.56 euro cents from 60.65, unchanged at 76.09 yen and at 4.6197 Chinese yuan from 4.6502.

The two-year swap rate is at 1.8969 per cent from 1.9109 on Monday; the 10-year swap rate is at 2.4800 per cent from 2.5100.