NZ Dollar Drops As Dairy Woes Trigger Rate Cut Speculation
July 02 2015 - 02:07AM
RTTF2
The New Zealand dollar weakened against the other major
currencies in the Asian session on Thursday, as a slide in dairy
prices raised speculation over further rates cut.
International dairy prices fell to a six-year low in the
Fonterra's GlobalDairyTrade auction overnight. The GDT price index
dropped 5.9 percent, while whole milk powder sank 10.8 percent.
Meanwhile, analysts slashed forecast payouts after milk prices
fell for the eighth time in a row at the overnight auction.
The average sale price at this morning's auction was US$2276 a
tonne, down from US$2409 at the previous fortnightly auction.
As the weaker dairy prices weigh on New Zealand's economy,
traders began speculating that the Reserve Bank of New Zealand is
likely to cut its interest rate again later this month. The bank
had lowered rates last month by 25 basis points.
RBNZ Governor Graeme Wheeler said earlier that a weak dairy
sector is one of three key risks to the nation's financial
stability. Also, a quarter of farmers were operating in negative
cash flow.
Traders now focus on the developments on the Greek debt crisis
front and also keep a close eye on the Labor Department's U.S.
monthly jobs report. The report is being released a day earlier
than usual due to the July 4th holiday.
Economists currently expect the report to show an increase of
about 230,000 jobs in June following the jump of 280,000 jobs
reported for May. The unemployment rate is also expected to dip to
5.4 percent.
In other economic news, New Zealand's commodity prices fell for
the third successive month in June due to lower aluminum prices,
although the rate of decline slowed when compared to the previous
month, the results of survey by ANZ showed.
The ANZ commodity price index decreased 3.1 percent
month-over-month in June, following a 4.9 percent drop in May.
Wednesday, the NZ dollar showed mixed trading against its major
rivals. While the NZ dollar fell against the U.S. dollar, it rose
against the euro. Meanwhile, the NZ dollar held steady against the
yen and the Australian dollar.
In the Asian trading today, the NZ dollar fell to a 5-year low
of 0.6693 against the U.S. dollar and nearly a 2-year low of 1.1413
against the Australian dollar, from yesterday's closing quotes of
0.6731 and 1.1343, respectively. On the downside, 0.65 against the
greenback and 1.15 against the aussie are seen as the next support
level for the kiwi.
Against the yen and the euro, the kiwi dropped to 2-day lows of
82.56 and 1.6513 from yesterday's closing quotes of 82.91 and
1.6404, respectively. If the kiwi extends its downtrend, it is
likely to find support around 81.00 against the yen and 1.67
against the euro are seen as the next support levels for the
kiwi.
Looking ahead, U.K. Nationwide house price index for June is due
to be release at 2:00 am ET. Additionally, U.K. CIPS/Markit
construction PMI for June and Eurozone PPI for May are also slated
for release.
In the New York session, U.S. weekly jobless claim for the week
ended June 27, U.S. jobs data for June and factory orders for May
are set to be announced.
NZD vs US Dollar (FX:NZDUSD)
Forex Chart
From Feb 2024 to Mar 2024
NZD vs US Dollar (FX:NZDUSD)
Forex Chart
From Mar 2023 to Mar 2024