Kiwi drifts from month-high as Trump unveils budget proposals, Fonterra forecast

Local trade figures later today are expected to add to the upbeat domestic outlook, as will tomorrow's government budget.

The New Zealand dollar drifted off a month-high as US President Donald Trump unveiled plans to cut government spending, easing some nerves about the White House's ability to press ahead with reforms, while domestically Fonterra Cooperative Group is poised to announce its opening milk price forecast for 2018.

The kiwi rose as high as 70.46 US cents and traded at 70.01 cents as at 8am from 70.19 cents yesterday. The trade-weighted index was unchanged at 75.80.

Stocks on Wall Street and the US dollar index rose after Trump announced plans to strip US$3.6 trillion from government spending over the next decade with the biggest cuts targeted at the Medicaid healthcare programme. The greenback has come under pressure in recent weeks as investors questioned whether Trump would be able to proceed with his planned tax reform and infrastructure programme after getting bogged down in a political scandal with the Federal Bureau of Investigation probing links between his election campaign and the Russian government.

That comes ahead of Fonterra's opening forecast for the upcoming season, which is expected to be at least $6 per kilogram of milk solids and may also include an increase for the current season as global dairy prices remain strong. Local trade figures later today are expected to add to the upbeat domestic outlook, as will tomorrow's government budget.

"The NZD has positive momentum as it eyes a likely firm first milk price forecast from Fonterra for the 2017/18 season of at least $6 (possibly out today, or maybe tomorrow) and tomorrow's government budget revealed a healthy set of fiscal accounts," Bank of New Zealand economist Doug Steel said in a note. "A higher-than-market estimate (as we anticipate) for April's NZ trade surplus in this morning's data would only add to the positivity, although month trade data seldom causes market movement."

Trading was relatively quiet after yesterday's bombing at a pop concert in the English city of Manchester that killed 22 people. The kiwi traded at 54 British pence from 54.02 pence yesterday.

The local currency rose to 62.60 euro cents from 62.37 cents yesterday after German Finance Minister Wolfgang Schaeuble echoed his leader's comments yesterday in calling the euro too weak for Europe's biggest economy.

The kiwi gained to 78.23 yen from 78.01 yen yesterday and slipped to 4.8195 Chinese yuan from 4.8346 yuan. It traded at 93.58 Australian cents from 93.60 cents yesterday.