NZ dollar rises as Chinese stimulus underpins commodity prices gains

The kiwi rose to 67.99 US cents as at 8am in Wellington. Photo: Lynn Grieveson

The New Zealand dollar followed its Australian counterpart higher as efforts by Chinese authorities to stimulate the world's second-biggest economy underpinned gains in commodity prices.

The kiwi rose to 67.99 US cents as at 8am in Wellington from 67.73 cents yesterday. The trade-weighted index was 73.09 from 73 yesterday.

The Thomson Reuters CRB commodity price index - a measure of 19 commonly traded commodities - rose 0.4 percent and China's Shanghai Composite Index gained 1.6 percent as investors assessed recent steps by the People's Bank of China to inject greater liquidity into the lending system and China's State Council said fiscal policy should be more proactive. Chinese authorities are responding to a slowing economy, but are also seen as attempting to insulate their country from the impacts of a trade war with the US.

"The best performing currency on the day is the Australian dollar, up almost 0.5 percent, on the back of higher commodity prices and a more positive tone around China," Bank of New Zealand interest rate strategist Nick Smyth said in a note. "The NZD is a little higher than this time yesterday, as it continues to consolidate above support levels around US$0.67."

The local currency fell to 91.63 Australian cents from 91.82 cents yesterday ahead of Australian inflation data today expected to show consumer prices rose 0.5 percent in the June quarter for an annual pace of 2.2 percent. The Reserve Bank of Australia is seen keeping its target cash rate at 1.5 percent until late next year.

Local data today include June merchandise trade figures.

The kiwi increased to 58.18 euro cents from 57.97 cents yesterday and traded at 51.71 British pence from 51.73 pence. It rose to 75.61 yen from 75.38 yen yesterday and advanced to 4.6173 Chinese yuan form 4.6128 yuan.