NZ dollar edges up after latest food scare; RBNZ’s Wheeler speech looms
The New Zealand dollar edged up in local trading after another food scare in the country's dairy sector, and ahead of tomorrow's speech by Reserve Bank governor Graeme Wheeler on macro-prudential policy.
The kiwi rose to 81.18 US cents at 5pm in Wellington from 80.98 cents at 8am and 80.97 cents on Friday in New York. The trade-weighted index increased to 76.22 from 76.09.
New Zealand's Ministry for Primary Industries revoked the export certificates on four consignments of lactoferrin made by Westland Milk today after they were found to contain unacceptable levels of nitrates.
The discovery comes on the heels of a larger food contamination scare at Fonterra Cooperative Group, the country's biggest company, which is seeking to quell global fears about the safety of its products when it discovered bacteria that can cause botulism in three batches of whey protein concentrate earlier this month. Dairy accounts for about a quarter of New Zealand's exports.
"They're all little things that add up to tarnishing the 100% Pure brand," said Imre Speizer, market strategist at Westpac Banking Corp.
That comes as investors are preparing for the RBNZ's Wheeler to deliver a speech tomorrow entitled 'explaining the role of macro-prudential policy'. New Zealand's central bank has gone through a consultation phase on introducing restrictions on low equity mortgage lending, and is expected to impose the regime in a bid to cool the Auckland and Canterbury housing markets.
"Even if they do announce it tomorrow, you might see a knee-jerk dip in the kiwi, but not much more after that," Speizer said.
The major event this week will be the release of the minutes to the last Federal Open Market Committee meeting on monetary policy, and investors will be looking for any further clues on the Fed's plans to start unwinding its stimulus programme.
A BusinessDesk survey of 10 traders and strategists predicts the local currency will trade between 79.25 US cents and 82.25 cents this week. Seven expect the currency will gain this week, two predict a decline and one says it will likely remain unchanged.
The local currency rose to at 79.20 yen from 78.96 on Friday in New York and traded at 88.11 Australian cents from 88.13 cents. It increased to 60.92 euro cents from 60.74 cents last week and advanced to 51.95 British pence from 51.80 pence.