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

 


NZ dollar tumbles on weak dairy prices, benign inflation

NZ dollar tumbles; weak dairy prices, benign inflation may slow rate hikes

By Jonathan Underhill

Jul. 16 (BusinessDesk) - The New Zealand dollar tumbled on speculation a slump in dairy prices and inflation data that’s weaker than expected will give the Reserve Bank more room to pause in its interest rate tightening cycle.

The kiwi dropped to 86.98 US cents at 5pm in Wellington, from 87.69 cents at the start of the day and down from 88.07 cents late yesterday. The trade-weighted index fell to 81.04 from 81.86 yesterday.

The local currency’s decline began after Federal Reserve chair Janet Yellen gave what was seen as a more upbeat account of the US economy and the kiwi remained low after the GDT Price Index, a measure of dairy prices, dropped 8.9 percent to the lowest level since December 2012 in the latest GlobalDairyTrade auction. It tumbled again after second-quarter consumer prices rose a less-than-expected 0.3 percent.

“The market has been pricing in a 90 percent chance of a rate hike next week,” said Stuart Ive, senior dealer at OMF. “That is called into question when you combine the milk price falling off a cliff, house price inflation starting to pull back and a market caught somewhat left-sided by weaker CPI data.”

He said the market is now pondering whether today’s events constitute enough data for the Reserve Bank to pause “as early as next week, or at least in September,” especially as it would help drive down a currency that governor Graeme Wheeler has called unsustainably high.

The kiwi traded at 64.14 euro cents from 64.64 cents late yesterday and fell to 50.76 British pence from 51.54 pence. It dropped to 88.49 yen from 89.45 yen and declined to 93.13 Australian cents from 93.73 cents yesterday.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Brewing: Lion To Buy Cult Upper Hutt Brewer Panhead

Lion - Beer, Spirits and Wine (NZ), New Zealand's biggest beer maker, has agreed to buy Panhead Custom Ales from the family of founder Mike Neilson, its second such purchase of a popular craft brewer after the acquisition of Dunedin-based Emerson's Brewing Co in 2012. More>>

ALSO:

Half Empty: Fonterra's 2017 Opening Forecast Below Expectations

Fonterra Cooperative Group raised its forecast farmgate milk payout for next season by less than expected as the world's largest dairy exporter predicts lower prices will crimp production and supply will pick up. The New Zealand dollar fell. More>>

ALSO:

Pest Control: Mouse Blitz Team Leaves For Antipodes

The Million Dollar Mouse project to rid Antipodes Island of mice is underway with the departure of a rodent eradication team to the remote nature reserve and World Heritage Area. More>>

Gongs Got: Canon Media Awards & NZ Radio Awards Happen

Radio NZ: RNZ website The Wireless, which is co-funded by NZ On Air, was named best website, while Toby Manhire and Toby Morris won the best opinion general writing section for their weekly column on rnz.co.nz and Tess McClure won the best junior feature writer section. More>>

ALSO:

Pre-Budget: Debt Focus Risks Losing Opportunity To Stoke Economy

The Treasury is likely to upgrade its forecasts for economic growth in Budget 2016 next week but Finance Minister Bill English has already signalled that more of his focus is on debt repayment than on fiscal stimulus or tax cuts... More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news