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Dollar slips as dairy prices rise

The GDT auction "provided no significant surprise" – BNZ's Kymberly Martin

Jonathan Underhill
Wed, 07 Dec 2016

The New Zealand dollar fell as dairy prices rose in the latest GlobalDairyTrade auction and traders looked ahead to Reserve Bank governor Graeme Wheeler's appearance at parliament today, which may give him scope to comment on monetary conditions.

The kiwi dollar fell to 71.08USc at 8am in Wellington, and earlier dipped as low as 70.98USc, from 71.33USc late yesterday. The trade-weighted index fell to 77.96 from 78.20.

Whole milk powder climbed 4.9% to $US3593 a tonne at the auction overnight, meeting expectations as the total volume of dairy products sold on the platform fell to 22,472 tonnes from 23,902 tonnes at the previous auction. It was the eighth gain in nine auctions, reflecting a decline in supply.

The GDT auction "provided no significant surprise," Bank of New Zealand senior market strategist Kymberly Martin says. "Fundamentals suggest the risks are tilted toward near-term price gains, but potential for some consolidation during 2017."

The US dollar index rose overnight as the euro fell against the greenback.

Mr Wheeler is due to appear before the finance and expenditure select committee this morning to answer questions on the annual review of the bank.

While Mr Wheeler is talking about the central bank's annual report, "there is potential for market relevant discussions," Ms Martin says.

Investors are also awaiting Australian third-quarter gross domestic product figures, which are expected to show a 0.1% decline after a gain of 0.5% three months earlier.

The kiwi declined to 95.35Ac from 95.82Ac yesterday, when the Reserve Bank of Australia kept its key rate unchanged.

The kiwi traded at 66.33€c from 66.44€c late yesterday. It fell to 4.8889 yuan from 4.9115 yuan, dropped to 81.07 yen from 81.36 yen and traded at 56.08 British pence from 56.11 pence.



Jonathan Underhill
Wed, 07 Dec 2016
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Dollar slips as dairy prices rise