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

 

Scoop Business: Govt Resisting Pressure To Pump More Cash Into Solid Energy

Prime Minister John Key says it is “not the government’s preferred option” to make a fresh capital injection into the troubled state-owned coal miner, Solid Energy, but dodged journalists’ questions at his weekly press conference on whether that might prove necessary... More>>

ALSO:

Lagest Ever Privacy Breach Award: NZCU Baywide Accepts “Severe” Censure In Cake Case

NZCU Baywide says that once it was found to have committed a breach of a former staff member’s privacy, it had attempted to resolve the matter... the censure and remedies for its actions taken almost three years ago are “severe” but accepted, and will hopefully draw a line under the matter. More>>

ALSO:

Scoop Business: PayPal Stops Processing Mega Payments; NZX Listing Still On

PayPal has ceased processing payments for Mega, the file storage and encryption firm looking to join the New Zealand stock market via a reverse listing of TRS Investments, amid claims it is not a legitimate cloud storage service. More>>

ALSO:

Housing Policy: Auckland Densification As Popular As Ebola, English Says

Finance Minister Bill English said calls by the Reserve Bank Governor for more densification in Auckland’s housing were “about as popular in parts of Auckland as Ebola” would be. More>>

ALSO:

Crown Accounts: NZ Government Deficit Smaller Than Expected In First Half

The New Zealand government's operating deficit was smaller than expected in the first six months of the financial year, as the consumption and corporate tax take rose ahead of forecast in December, having lagged estimates in previous months. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

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