Kiwi gains against AUD after soft Chinese manufacturing figures

The New Zealand dollar gained against its transTasman counterpart in local trading after soft Chinese manufacturing figures weighed more heavily on Australia, with both countries increasingly reliant on exporting commodities to the world's second biggest economy.

The kiwi rose to 82.86 Australian cents at 5pm in Wellington from as low as 82.41 cents and 82.69 cents yesterday. It was little changed at 84.91 cents at 5pm from 84.83 cents at 8am, down from 85.73 cents yesterday.

The final reading of the unofficial HSBC purchasing managers' index was 50.4, just short of the preliminary finding and implying China's manufacturing sector is only just staying in expansion territory.

China is the biggest trading partner for both New Zealand and Australia, though the latter is more reliant hard commodity exports such as coal and iron ore, whereas New Zealand's export profile is in soft commodities, such as food.

The Australian dollar fell to $US1.0244 at 5pm in Wellington from $US1.0363 yesterday.

"The HSBC reading was slightly lower than expected after yesterday's official one," says Alex Hill, currency strategist at HiFX in Auckland. The Australian dollar "gave up a bit more ground, pushing the kiwi/Aussie to the extreme end of its current range".

The transTasman currency came under pressure in the Northern Hemisphere trading session after a key private payrolls report in the US showed growth of 119,000 jobs last month, compared to 150,000 expected.

That prompted analysts to pare back their expectations for the official employment figures on Friday in Washington.

Trade-weighted prices across all products at Fonterra's GlobalDairyTrade auction dropped 7.3 percent, with the average price for whole milk powder sinking 10 percent.

Meantime, New Zealand commodity prices surged last month by the most since the ANZ Commodity Price Index was created in 1986, driven by skim and whole milk powder, butter and cheese.

Traders are awaiting the European Central Bank meeting overnight in Brussels and are expecting it to cut its benchmark rate a quarter-point to 0.5 percent. The kiwi dropped to 64.46 euro cents from 65.11 cents yesterday.

It sank to 54.61 British pence from 55.20 pence yesterday and dropped to 82.60 yen from 83.37 yen. The trade-weighted index sank to 78.10 from 78.65

(BusinessDesk)