By Dan Bell
The NZD/USD is weaker overnight dropping to a low of 0.8133 from yesterday’s highs around 0.8260.
The NZD came under pressure yesterday afternoon after Australian mining giant BHP Billiton said growth in iron ore demand was flattening due to a slowdown in China. The Aussie came under immediate pressure - and the Kiwi quickly followed.
The NZD and AUD are becoming increasingly sensitive to economic news related to China. Global investors have been willing to back our currencies on the basis of our exposure to China but will just as readily sell our currencies if China continues to slow. NZ is heavily exposed to China in 2 ways. Our largest trade partner is Australia - our 2nd largest is China. Australia’s largest trade partner is China!
Global equity markets are weaker overnight with the S&P 500 down 0.30% as I write.
Commodities have been hit harder with the CRB Index down 1.2% led by Oil prices down 2.3%, Silver -3.13% and Gold down 1.3%.
Fonterra milk auction result this morning has seen average prices down 4.5% - the fourth straight decline which has prices down almost 30% from last year’s four year peak.
The NZD is weaker against most major currencies and opens at current indicative levels: 0.6170 EUR, 0.5140 GBP, 0.7790 AUD, 68.30 JPY.
On the local front we get NZ Balance of Payments at 10:45 this morning. Not a huge focus these days but worth a look.
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Dan Bell is the senior currency strategist at HiFX in Auckland. You can contact him here
(Updated with Dow close)
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2 Comments
Fonterra had a bad night
http://www.stuff.co.nz/business/farming/6609873/Fonterra-auction-Prices…
GlobalDairyTrade Event 64 concluded with the GDT TWI down 4.5%.
Key results:
AMF down 9.5% to US$3,284/MT
Ched down 11.3% to US$3,114/MT
MPC70 down 15% to US$4,345/MT
RenCas down 12.9% to US$6,545/MT
SMP down 2% to US$3,125/MT
WMP down 2.6% to US$3,316/MT
Full results have been published on www.GlobalDairyTrade.info.
The FX boys along with the Banking fraternity are currently leaping to tell us the N.Z. dollar is no longer tracking commodity prices A.J. it's all about how stable we are now...how long Bolly will live....pie in the sky stuff ..you know something you can get your teeth into..!
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