Kiwi little changed near 17-month low ahead of dairy auction

Merkel and Draghi's announcements weighed on the euro overnight.

The New Zealand dollar was little changed against the greenback ahead of tonight's dairy auction and held onto its gains versus the euro amid political uncertainty in Germany.

The kiwi dollar traded at 68.07 US cents as at 8:30am in Wellington from 68.11 cents late yesterday. It fell as low as 67.79 cents last week, the lowest since mid-2016. The kiwi traded at 58.01 euro cents from 58.03 cents yesterday, when it gained after reports that German coalition talks broke down.

Tonight's GlobalDairyTrade auction comes after three consecutive declines in dairy product prices and against a backdrop of commodity currencies being generally out of favour. Ahead of the auction there is little of note on the domestic economic calendar. The kiwi gained against the euro yesterday after German coalition talks stalled when the Free Democratic Party said it couldn't work with the Green party.

"The NZD/USD remained in its new, lower range overnight," said Sharon Zollner, senior economist at ANZ Bank New Zealand. "It still looks vulnerable to the downside as global risk sentiment remains shaky, although market positioning could make moves lower a struggle."

German chancellor Angela Merkel said she would prefer new elections than to persist with a minority government. Also weighing on the euro overnight, European Central Bank president Mario Draghi flagged the likelihood of eurozone interest rates staying low for longer given the tepid level of inflation.

The trade-weighted index was little changed at 72.25 from 72.27 yesterday. The kiwi traded at 90.19 Australian cents from 90.15 cents and at 51.45 British pence from 51.59 pence. The local currency traded at 4.5124 yuan from 4.5186 yuan and rose to 76.68 yen from 76.29 yen.