Kiwi edges lower after Fonterra cuts 2013 forecast
Falling commodity prices and a strong currency cited.
BUSINESSDESK: The New Zealand dollar slipped after dairy exporter Fonterra cut its 2013 forecast payout to farmers, citing falling commodity prices and a strong currency.
The kiwi fell to 80.71 US cents at 5pm in Wellington from 80.81 cents at 8am and 81.05 cents yesterday. The trade-weighted index declined to 72.64 from 72.86 yesterday.
Fonterra, the world's biggest dairy exporter, lowered its forecast for the Farmgate Milk price component to $5.25 per kilogram of milksolids from $5.50/kgms and reduced its forecast for the net profit component to a range of 40-50 cents from 45-55 cents per share.
The Auckland-based company says the kiwi's strength had eroded recent gains in commodity prices, and while it expects a pick-up in global dairy prices it couldn't predict the strength of that recovery.
"Fonterra was a surprise to us. We didn't expect another change so soon and it's interesting given the amount of volume they've been doing," says Tim Kelleher, head of institutional FX sales NZ at ASB Institutional in Auckland. "It's had a bit of a dampener on the kiwi."
He says the kiwi may head back towards 80 US cents this week with the milk price cut and general unease over Australia's economy after today's weak house sales figure added to pessimism the "Lucky Country" may come under pressure if demand for its resources from developing economies slows.
Markets are waiting for the central bankers' summit in Jackson Hole, Wyoming, that kicks off late on Friday, with speeches from Federal Reserve chairman Ben Bernanke and European Central Bank president Mario Draghi the highlights.
The kiwi declined to 64.66 euro cents from 64.76 cents and was little changed at 77.92 Australian cents from 77.99 cents. It fell to 63.37 yen from 63.81 yen and declined to 51.11 British pence from 51.26 pence.
Paul McBeth
Wed, 11 Jul 2018
Wed, 11 Jul 2018
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Kiwi edges lower after Fonterra cuts 2013 forecast
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