Market Talk - Currency: Dairy woes and Wall Street blows

Jason Walls and ANZ's Sam Tuck discuss the global currency market news on NBR Radio and on demand on MyNBR Radio.

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The dollar had little reaction to the bounce in prices at the GlobalDairyTrade (GDT) auction last week, after milk price futures forecasted prices at the auction would jump.

Although the GDT milk price was priced in by markets, NBR reporter Jason Walls says a two-year ban on New Zealand dairy imports being partially lifted in Russia, allowing 29 dairy producers to sell dairy products to the county, saw the New Zealand dollar jumping slightly last week.

ANZ senior FX strategist Sam Tuck says after the GDT, the NZX futures continued its drift higher.

“In fact, quite a rampant drift higher, causing the New Zealand dollar to catch a bid in global markets and, over the subsequent volatility over the week, the New Zealand dollar remained reasonably strong,” he says.

It looks as if Wall Street’s six year bull run is on thin ice, after the Dow dropped more than 1000 points last week.

Mr Walls says there are a number of factors at play.

“Fears from China, the global plunge in commodity prices, some uncertainly around US interest rates are all playing on Wall Street,” Mr Walls says.

Mr Tuck says concerns regarding the US Federal Reserve putting its rate hike plans on hold is a particular concern to the market.

“The US economy is still preforming all right, but the markets are concerned that the US Fed can’t normalise interest rates,” he says.

He says the markets are now only 30% pricing an interest rate hike, down from 50% a week ago.   

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