Dollar little changed with US holiday; may fall on weaker dairy prices
NZ economy and dairy prices are subservient to the US dollar's trend – Imre Speizer
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The dollar was little changed, getting little overnight impetus with the US on holiday, but it may drop if dairy prices fall at tonight's auction and expectations firm for interest rate hikes by the Federal Reserve.
The kiwi traded at 71.82USc at 8am in Wellington from 71.75USc late yesterday. The trade-weighted index was at 78.22 from 78.15.
Fed chairwoman Janet Yellen has indicated a rate hike could come as soon as next month and the market is awaiting the minutes of the last Federal Open Market Committee this week for further detail of policymakers' thinking.
In New Zealand, Finance Minister Steven Joyce is scheduled to talk at lunchtime in Wellington and the GlobalDairyTrade auction overnight may deliver a 3% drop for whole milk powder, based on the NZX dairy futures.
"The Fed's tightening cycle plus US fiscal expansion should maintain upside pressure on US interest rates and the US dollar, pushing NZD/USD down to 0.7000 or lower," Imre Speizer, senior market strategist at Westpac Banking Corp, says.
"Granted, the NZ economy is strong and dairy prices have risen, but these forces are subservient to the US dollar's trend."
The Reserve Bank has kept its official cash rate at a record low 1.75% and didn't signal any rate increases until mid-2019.
Economists are expecting the central bank to lift rates at some point in 2018. The New Zealand dollar has traded in a range of 71.32USc to 72.42USc in the past two weeks.
The local dollar slipped to 57.64 British pence from 57.78 pence yesterday. The kiwi traded at 67.67€c from 67.61€c, was at 81.27 yen versus 81.16 yen and at 4.9383 yuan from 4.9264 yuan. It was at 93.47Ac from 93.48Ac.
(BusinessDesk)
Jonathan Underhill
Tue, 21 Feb 2017
Tue, 21 Feb 2017
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Dollar little changed with US holiday; may fall on weaker dairy prices
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