Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Wednesday’s Dairy pay-out to keep pressure on Kiwi

Wednesday’s Dairy pay-out to keep pressure on Kiwi


By Garry Dean (Sales Trader, CMC Markets New Zealand)

Last week we saw dairy prices at Fonterra’s Global Dairy Trade auction slump a further 1.8%, taking the overall decline to around 23% over the past seven auctions. It’s therefore not surprising that the market is expecting Fonterra on Wednesday morning to announce a reduction in its forecast payment for the current season from NZ$8.65 per kilo to around NZ$8.40, and to potentially drop the opening level for next season to around NZ$7.00. With dairy accounting for 30% of New Zealand’s merchandise exports, a number below NZ$7.00 should keep the currency under further pressure.

Kiwi is trading currently around 0.8550, and on the week is expected to encounter buying interest in the key 0.8500 – 0.8515 support window, with resistance seen on any advance towards 0.8600. Last week saw failed attempts to regain the 0.8600 handle, despite a rally in risk assets following a string of solid Manufacturing PMI numbers from China, Japan and the US, as well Fed minutes which reaffirmed the FED’s accommodative stance. Short-term bullish RSI divergence is noted in the Kiwi currently, but the trader market seems comfortable selling into strength at present, suggesting rallies on the week may struggle to extend much beyond 0.8600.

Traders are looking towards the 12 June MPS, and questioning the extent to which the RBNZ will track further rate rises going forward. The continued slump in dairy prices, a fall in consumer confidence, and a continued cooling in the housing market will likely see Governor Wheeler rein in some of the 200pts of rate hikes over two years he indicated at the March MPS. He will be encouraged by the fact the RBNZ June Quarter Survey of Expectations showed inflation expected to be at 2.08% in a year’s time, up only slightly from the previous survey. Also encouraging is the sharp fall in people expecting house price gains in the next 12 months – down to its lowest level since September 2012. With Consumer Confidence having slumped 4.4% in May, the market will watch Wednesday’s Business Confidence numbers to see if that weakness is reflected there also.

Ends

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

RMTU: Mediation Between Lyttelton Port And Union Fails

The Rail and Maritime Union (RMTU) has opted to continue its overtime ban indefinitely after mediation with the Lyttelton Port of Christchurch (LPC) failed to progress collective bargaining. More>>

Earlier:

Science Policy: Callaghan, NSC Funding Knocked In Submissions

Callaghan Innovation, which was last year allocated a budget of $566 million over four years to dish out research and development grants, and the National Science Challenges attracted criticism in submissions on the government’s draft national statement of science investment, with science funding largely seen as too fragmented. More>>

ALSO:

Scoop Business: Spark, Voda And Telstra To Lay New Trans-Tasman Cable

Spark New Zealand and Vodafone, New Zealand’s two dominant telecommunications providers, in partnership with Australian provider Telstra, will spend US$70 million building a trans-Tasman submarine cable to bolster broadband traffic between the neighbouring countries and the rest of the world. More>>

ALSO:

More:

Statistics: Current Account Deficit Widens

New Zealand's annual current account deficit was $6.1 billion (2.6 percent of GDP) for the year ended September 2014. This compares with a deficit of $5.8 billion (2.5 percent of GDP) for the year ended June 2014. More>>

ALSO:

Still In The Red: NZ Govt Shunts Out Surplus To 2016

The New Zealand government has pushed out its targeted return to surplus for a year as falling dairy prices and a low inflation environment has kept a lid on its rising tax take, but is still dangling a possible tax cut in 2017, the next election year and promising to try and achieve the surplus pledge on which it campaigned for election in September. More>>

ALSO:

Job Insecurity: Time For Jobs That Count In The Meat Industry

“Meat Workers face it all”, says Graham Cooke, Meat Workers Union National Secretary. “Seasonal work, dangerous jobs, casual and zero hours contracts, and increasing pressure on workers to join non-union individual agreements. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news