Article – BusinessDesk

Feb. 21 (BusinessDesk) – The New Zealand dollar fell ahead of a possible slide in global milk prices in the overnight Global Dairy Trade auction.Tuesday 21 February 2017 05:20 PM

NZ dollar falls ahead of milk auction

By Rebecca Howard

Feb. 21 (BusinessDesk) – The New Zealand dollar fell ahead of a possible slide in global milk prices in the overnight Global Dairy Trade auction.

The kiwi traded at 71.55 US cents at 5pm in Wellington from 71.82 US cents at 8am and 71.75 cents late yesterday. The trade-weighted index was at 78.03 from 78.15.

“It is just under a bit of pressure here ahead of the milk auction tonight,” said OMF private client manager Stuart Ive. He said the local currency started to slide after the Reserve Bank of Australia published its minutes from the Feb 7 rate review. The RBA said it judged “holding the stance of policy unchanged” would see inflation return to its 2 percent to 3 percent inflation target over time, according to the minutes. It remained optimistic about the economy, with GDP growth expected to pick up to around 3 per cent in year-end terms later in 2017, and to remain above estimates of potential growth over the rest of the forecast period.

“Traders are keen to push the New Zealand dollar a bit further south against the Aussie ahead of the milk auction, which could show prices are up to 5 percent lower based on the futures,” said Ive.

The kiwi was trading at 93.26 Australian cents from 93.48 cents. Dairy product prices eked out a gain at the latest Global Dairy Trade auction, bucking expectations for a decline, as both whole and skim milk powder rose. The fortnightly auction tends to push the kiwi around given that dairy exports make up nearly a quarter of New Zealand’s exports.

Ahead of the milk auction, Ive said traders will be watching for European manufacturing data as well as speeches by two voting US Federal Reserve members later in the global trading day. The market will be looking for any clues about whether the Federal Reserve could move to lift rates in March.

The local dollar slipped to 57.52 British pence from 57.78 pence yesterday. The kiwi traded at 67.62 euro cents from 67.61 cents, was at 81.32 yen versus 81.16 yen and at 4.9255 yuan from 4.9264 yuan.

New Zealand’s two-year swaps fell four basis points to 2.32 while 10-year swap rates fell 2 basis points to 3.50 percent.

(BusinessDesk)

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