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

 


NZ dollar falls below 85 US cts after Fonterra cuts payout

NZ dollar falls below 85 US cts after Fonterra cuts payout to farmers

By Tina Morrison

July 30 (BusinessDesk) - The New Zealand dollar dropped below 85 US cents for the first time in seven weeks after Fonterra Cooperative Group cut its forecast payout to dairy farmers and a stronger US currency saw the kiwi lose some of its allure.

The kiwi fell as low as 84.90 US cents overnight and was trading at 84.96 cents at 8am in Wellington, from 85.15 cents at 5pm yesterday. The trade-weighted index fell to 79.40 from 79.52

The New Zealand dollar underperformed other major currencies overnight amid broad US dollar strength, with the greenback holding close to this year's high against a basket of currencies. Optimism is building about a recovery in the world's largest economy ahead of major data and policy announcements this week starting with tonight's Federal Reserve meeting and second-quarter GDP data and private payrolls report. The kiwi has fallen half a cent since yesterday morning in the lead-up to Fonterra's announcement it would cut the 2015 forecast payout to $6 per kilogram of milk solids from a previous forecast of $7/kgMS and from a record $8.40 /kgMS in 2014.

"It was a night of broader based US dollar strength," said Bank of New Zealand currency strategist Raiko Shareef. "The New Zealand dollar was the major underperformer and that can broadly be attributed to the Fonterra news yesterday. That continues the pressure that has been building on kiwi for essentially all of July."

The local currency has declined 3.1 percent so far this month amid weaker-than-expected inflation and commodity prices and following Reserve Bank hints it may intervene to pull down the kiwi after signalling a pause in its hiking cycle.

"We have had a series of quite sharp setbacks for the kiwi, all fundamentally bringing it back in line with where it really should be," said the BNZ's Shareef. "The pressure is still lower."

Traders will now be looking for direction from the US, starting with tonight's key releases and ending the week with a key payrolls report on Friday. The kiwi may head down towards 84 US cents should the US announcements exceed expectations, Shareef said.

Today, New Zealand data is released on June building consents.

The kiwi slipped to 90.52 Australian cents from 90.62 cents yesterday, weakened to 63.36 euro cents from 63.40 cents, was little changed at 50.15 British pence from 50.17 pence and declined to 86.75 yen from 86.84 yen.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Balance Of Trade: NZ Posts Trade Deficit In October On Falling Dairy Exports

New Zealand’s posted its largest monthly trade deficit for October in six years, while narrowing the shortfall from September, led by a fall in dairy exports to China while all main imports into the country rose. More>>

ALSO:

Gigatown Winner: Plenty Of Positives For Dunedin

Although the city has taken the Gigatown title, along with new ultrafast 1Gbps broadband and funding for $700,000 worth of UFB-related initiatives across the community, Mr Cull says Dunedin has gained so much more through its involvement. More>>

ALSO:

R18: The Warehouse Group Praised For Removing Games

The decision by New Zealand’s largest retailer The Warehouse Group (TW Group), to withdraw stocks of the latest version of Grand Theft Auto V (GTA V) and other R18 games, has been praised by advocacy group Stop Demand Foundation. More>>

ALSO:

Air NZ Wine Awards: Victory For Villa Maria As Pinot Noir Thrills

It was a night to remember as Villa Maria Estate picked up one of the highest accolades of the evening, the O-I New Zealand Reserve Wine of the Show Trophy, at the 28th Air New Zealand Wine Awards. The Villa Maria Single Vineyard Southern Clays Marlborough ... More>>

ALSO:

Future Brighter Money: RBNZ Releases New Bank Note Designs

New Zealand’s banknotes are getting brighter and better, with the Reserve Bank today unveiling more vibrant and secure banknote designs which will progressively enter circulation later next year. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

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