NZ dollar falls to 3-week low as prices gains at dairy auction fail to halt weakening trend
The New Zealand dollar fell, touching a three-week low, with gains in dairy prices doing little to halt a weakening trend for the currency.
The kiwi fell to 69.68 US cents as at 8am in Wellington, and earlier touched a three-week low of 69.65 cents, from 69.87 cents late yesterday. The trade-weighted index slipped to 75.87 from 75.93.
The aggregate price index rose 1.6 percent in the GlobalDairyTrade auction overnight, while whole milk powder rose 2.4 percent. However, the kiwi dollar barely reacted. Nor did it move much after the Quarterly Survey of Business Opinion yesterday showed business remained upbeat in the first quarter, although optimism has waned. The ANZ commodity price index for March is out at 1pm NZ time and will show whether there is a broader trend for commodity price increases.
"Fundamental factors are not driving the currency at present, so maybe we shouldn't be that surprised to see the NZD lower on almost all the crosses, a continuation from the theme of March," said Jason Wong, currency strategist at Bank of New Zealand, in a note.
The kiwi dollar has fallen from as high as 73.74 US cents in early February, with the decline hastened by Reserve Bank governor Graeme Wheeler's reminder to the market that interest rates are expected to remain low for the foreseeable future. Wong said there is "strong technical support" for the kiwi if it falls below 69 US cents.
The latest QV House Price Index from government-owned Quotable Value, released this morning, shows that while national property values increased on average by 12.9 percent over the year to March 31, the increase in the last three months was just 0.6 percent. QV said the slowdown in the pace of house price inflation in the first three months of this year may reflect lending restrictions imposed by the Reserve Bank last year.
The local currency traded at 92.07 Australian cents from 92.13 cents. It traded at 77.19 yen from 77.14 yen yesterday and fell to 4.7976 Chinese yuan from 4.8086 yuan. It declined to 65.29 euro cents from 65.45 cents and was little changed at 56.02 British pence from 56.01 pence.