News / Blog

NZ Dollar Continues Declining Against USD on Dairy Price Fall
January 6, 2017

The New Zealand dollar has continued to fall against the greenback, trading below 69 US cents off the back of the biggest drop in dairy prices in three months.
The Global Dairy Trade price index fell 3.9 per cent overnight, while whole milk powder fell 7.7 per cent to US$3,294 a tonne, mainly due to a lack of buyers to mop up the extra supply on offer.
The kiwi traded as low as 68.90 US cents this afternoon, before paring back to 69.02 US cents at 5 pm in Wellington, compared to 69.21 cents at 8 am and 69.46 cents yesterday. The trade-weighted index fell to 77.13 from 77.39 yesterday and 77.52 before the New Year holiday.
Mark Johnson, senior dealer, foreign exchange at Wellington-based OMF said apart from the dairy auction, there was little local data due over the next couple of weeks so the market was being driven by offshore.
“The global dairy trade auction was weaker again, the second consecutive fall and looking at the fundamentals of the economy, the auction weighs on the kiwi, while the US dollar index hit a 14-year high last night, and as a consequence, the kiwi is coming under pressure.”
Last night’s dairy auction was the first time prices have fallen for two auctions in a row for six months, although dairy prices remain up 44 per cent on a year ago.
Johnson added that the kiwi would need to break below 68.60 US cents if it was to leave its current range.
The local currency continued to fall against its Australian counterpart, trading at 95.34 Australian cents from 95.79 cents yesterday.and dropped against the yuan to 4.8004 yuan from 4.8167 yuan yesterday.
Beijing imposed tighter controls on foreign currency purchases over the weekend, with traders concerned about a possible rush of capital out of the country.
That hasn’t happened, strengthening both the yuan and the Australian dollar, which is sometimes used as a liquid proxy for the yuan.
The kiwi fell against the British pound, trading at 56.36 pence from 56.55 pence yesterday. It also dropped against the euro, to 66.32 euro cents from 66.56 euro cents.
The only major currency unchanged against the kiwi was the Japanese yen, with the NZ dollar trading at 81.46 yen from 81.45 yen yesterday.
The two-year swap rate fell 9 basis points to 2.40 per cent while the 10-year swap rate fell 13 basis points to 3.44 per cent.

By: TheCattleSite News Desk
Source: The Dairy Site


Cowsmo-Subs-HaveUHerd-166x250
Cowsmo-BreederLink-World-Fingers-166x200

CURRENT ISSUE

Mid Fall Special 2017