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:
NZ Puts Seven New Oil And Gas Areas Put Up For Tender

A total of seven new areas will be opened up to oil and gas exploration under its block offer tendering system, as the New Zealand government seeks to concentrate activity in a few strategically chosen areas. More>>

ALSO:

Half Full: Dairy Payouts Steady, Cash Will Be Tight

Industry body DairyNZ is advising farmers to focus on strong cashflow management as they look ahead to the 2015-16 season following Fonterra's half-year results announcement today. More>>

ALSO:

First Union: Cotton On Plans To Use “Tea Break” Law

“The Prime Minister reassured New Zealanders that ‘post the passing of this law, will you all of a sudden find thousands of workers who are denied having a tea break? The answer is absolutely not’... Cotton On is proposing to remove tea and meal breaks for workers in its safety sensitive distribution centre. How long before other major chains try and follow suit?” More>>

ALSO:

Scoop Business: NZ-Korea FTA Signed Amid Spying, Lost Sovereignty Claims

A long-awaited free trade agreement between New Zealand and South Korea has been signed in Seoul by Prime Minister John Key and the Korean president, Park Geun-hye. More>>

ALSO:

PM Visit: NZ And Viet Nam Agree Ambitious Trade Target

New Zealand and Viet Nam have agreed an ambitious target of doubling two-way goods and service trade to around $2.2 billion by 2020, Prime Minister John Key has announced. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news