Kiwi edges up as GDP looms and the US tax bill passes Senate

The New Zealand dollar gained ahead of third-quarter gross domestic product figures likely to show the economy grew at a slower pace due to weak milk production and after US President Donald Trump's tax bill was approved by the Senate.

The kiwi rose to 69.81 US cents as at 8am in Wellington from 69.61 cents yesterday. The trade-weighted index edged up to 73.49 from 73.33.

Economists expect New Zealand's economy probably grew 0.6 percent in the three months ended Sept. 30 with lower dairy production and weak household spending offsetting a bounce in the construction sector. Soft trade data and a surprise drop in dairy prices yesterday weighed on the kiwi dollar. However, the greenback wasn't buoyed by US legislators passing the tax bill, with some lingering concerns about whether Federal government funding will be approved to avoid a shutdown in January, limiting the local currency's weakness.

"Overall ho-hum performance is something we see continuing in the near-term as the economy navigates headwinds from the softer housing market, transitions in terms of its growth drivers, and grapples with some unease regarding the new political direction," ANZ Bank New Zealand senior economist Phil Borkin said in a note. "If local Q3 GDP figures come out as we expect, then that could continue, seeing the NZD/USD testing initial support around 0.6950."

Traders will also be watching Reserve Bank mortgage lending figures to see whether the central bank's planned relaxation of limits on highly-leveraged loans has started spurring credit growth.

The kiwi rose to 79.11 yen from 78.76 yen yesterday ahead of the Bank of Japan's policy review which is expected to reaffirm the central bank's commitment to controlling the yield curve.

The local currency fell to 5.8460 Swedish krona after the Riksbank announced it will end its quantitative easing programme and still expected to raise interest rates next year.

The kiwi rose to 91.02 Australian cents from 90.89 cents yesterday and was little changed at 4.5919 Chinese yuan from 4.5903 yuan. It traded at 58.75 euro cents from 58.74 cents yesterday and edged up to 52.10 British pence from 51.96 pence.

(BusinessDesk)