Dollar gains ahead of expected pick-up in dairy auction prices
Kiwi increased to 65.66USc at 8am in Wellington.
The New Zealand dollar rose ahead of tonight's GlobalDairyTrade auction amid expectations whole milk powder prices may rise, boosting the outlook for the nation's key export commodity.
The kiwi increased to 65.66USc at 8am in Wellington, from 65.38USc at 5pm yesterday. The trade-weighted index advanced to 70.69 from 70.31 yesterday.
The local currency advanced following a gain in NZX whole milk powder futures contracts, suggesting the price for New Zealand's key export commodity may rise in tonight's GDT, following declines in 10 of the last 11 fortnightly auctions. Since the start of the year, the price for whole milk powder on the GlobalDairyTrade platform has fallen by almost a third to $US1590 a tonne. That's prompted Fonterra Cooperative Group to cut its forecast payout to dairy farmers to below the cost of production and prompted some economists to revise down their expectations for economic growth in the coming year.
"The kiwi has outperformed everything overnight," said Tim Kelleher, ASB Bank head of institutional FX sales New Zealand. "The market is expecting that the dairy trade auction tonight will be more positive."
ASB expects whole milk powder prices to rally 10-15% overnight, based on futures pricing.
Traders may also be exiting short positions to realise profits this week given the currency has resisted moves below 65USc, said ASB's Mr Kelleher.
The New Zealand dollar advanced to 88.99Ac from 88.64Ac yesterday. Today, traders will be eyeing the release of the Reserve Bank of Australia's minutes to its last meeting to see if the bank makes mention of the Aussie dollar.
The local currency advanced to 59.26 euro cents from 58.95 cents yesterday, gained to 42.14 British pence from 41.78 pence, and rose to ¥81.67 from ¥81.31.
(BusinessDesk)
Tina Morrison
Tue, 18 Aug 2015
Tue, 18 Aug 2015
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Dollar gains ahead of expected pick-up in dairy auction prices
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