Dollar little changed after dairy price gain
The New Zealand dollar was little changed as prices for dairy products unexpectedly rose at the latest auction despite an increase in supply, while US equities and the greenback were weighed on by uncertainty over whether legislators will approve an overhaul to US healthcare cover.
The kiwi traded at 70.42 US cents as at 8am from 70.47 cents yesterday. The trade-weighted index was at 76.32 from 76.46 yesterday.
Whole milk powder prices rose 2.9 percent to US$2,855 a tonne at the GlobalDairyTrade auction. Analysts had been expecting a decline based on pricing in the futures market. That comes ahead of Fonterra Cooperative Group's first-half earnings result, with the world's biggest dairy exporter expected to give an update on their perceptions of the market. A wet spring sapped agricultural production in the December quarter, although economists have said indicators are pointing to a rebound in the first three months of this year.
"The prices for New Zealand’s commodities that make up roughly 60 percent of total goods exports are holding up better than expected. This is highlighted by the positive dairy auction overnight," ANZ Bank New Zealand agri economist Con Williams said in a note. "This should be supportive of New Zealand’s terms of trade remaining at historical highs, and alongside the broader economic story, be NZD supportive."
The US dollar index fell 0.7 percent and stocks on Wall Street were lower as investors weigh up whether US President Donald Trump will be able to convince legislators to amend the Affordable Healthcare Act, known as Obamacare, freeing up funds for the White House to embark on tax reform.
The kiwi fell to 78.80 yen from 79.45 yen yesterday and declined to 4.8498 Chinese yuan from 4.8673 yuan. It declined to 65.17 euro cents from 65.51 cents and decreased to 56.42 British pence from 56.98 pence. The local currency was little changed at 91.40 Australian cents from 91.37 cents yesterday.