The NZDUSD opens at 0.6901 (mid-rate) this morning.
The NZD which has been trading between 0.6850 and 0.6950 against the USD for the past week, and yesterday attempted to break through the topside during our afternoon trading session, suffered a sharp fall back to 0.6900 following a third consecutive fall in global dairy prices.
The latest Global Dairy Trade (GDT) auction resulted in the index’s largest fall since January when the index fell by 3.9%. This morning’s overall price index fell by 3.5% following on from a 1% fall on October 17 and 2.4% decrease in prices on October 3. Whole milk powder (WMP) suffered the sharpest fall down 5.5% while butter milk powder (BMP) which was not on offer at the previous auction saved the index from an even greater fall when its price spiked 7.2%.
The USD has appreciated on the news that Fed Bank of New York President William Dudley will be retiring in mid next year with his replacement to be appointed before Jan 19. Dudley has always been dovish on monetary policy and it is not sure that his replacement will have the same mind set toward interest rate hikes.
Yesterday afternoon, and in line with market expectations, the Reserve Bank of Australia maintained the cash rate at 1.5%. RBA Gov Philip Lowe highlighted slow wage growth and rising debt levels as major concerns for the Bank. Gov Lowe reiterated that "In underlying terms, inflation is likely to remain low for some time”. The AUD has fallen against all its major rivals since the announcement.
This morning’s Euro-zone retail sales data release for the month of September came in slightly ahead of economist’s estimates, increasing by 0.7% (exp +0.6%) The increase more than reverses the 0.1% fall in August.
Global equity markets remain mixed- Dow -0.2%, S&P 500 -0.17%, FTSE -0.65%, DAX -0.66%, CAC -0.48%, Nikkei +1.73%, Shanghai +0.75%.
Gold prices have slipped lower, down 0.5% trading at $1,275 an ounce. WTI Crude Oil prices are unchanged at $57.11 a barrel.
Current indicative rates:
NZDUSD 0.6901 -0.3%
NZDEUR 0.5958 -0.1%
NZDGBP 0.5244 -0.3%
NZDJPY 78.57 -0.3%
NZDAUD 0.9031 0.1%
NZDCAD 0.8823 0.1%
GBPNZD 1.9070 0.3%
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Dan Bell is the senior currency strategist at HiFX in Auckland. You can contact him here »
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