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

 

NZ Dollar Outlook: Falling kiwi likely on dairy weakness

NZ Dollar Outlook: Falling kiwi likely on further dairy industry weakness

By Tina Morrison

Aug. 3 (BusinessDesk) - The New Zealand dollar is expected to decline this week, weighed down by further weakness in the country's key dairy industry and by a strengthening US dollar.

A BusinessDesk survey of 10 currency analysts puts a possible trading range for the kiwi at between 64.50 US cents and 67.50 cents this week. Six expect a decline while four say it may remain largely unchanged. None are betting on a rise. The local currency recently traded at 65.85 US cents.

The price for New Zealand's key export commodity, whole milk powder, may decline as much as 10 percent at this week's fortnightly GlobalDairyTrade auction, according to prices for futures contracts on the NZX. Further price weakness as New Zealand ramps up seasonal milk production is likely to prompt Fonterra Cooperative Group, the country's dominant milk processor, to lower its forecast payout to farmers following its monthly board meeting on Friday, analysts say.

"It's going to add renewed pressure on the kiwi to the downside and further calls for the RBNZ to perhaps be a little bit more forceful in their view" about the impact on the economy of lower commodity prices, said Stuart Ive, OMF senior dealer, foreign exchange.

OMF expects Auckland-based Fonterra to cut its forecast payout for the 2015/16 season to $4.05 per kilogram of milk solids from $5.25/kgMS following Friday's board meeting.

"It again means the realisation that we are not going to see those billions flowing into the economy from the milk powder," Ive said. "Given the expectations around the data that we are going to see this week, we would say the pressures will remain to the downside almost certainly."

Other releases in New Zealand this week include the latest July property data from Quotable Value, due tomorrow, as well as July house sales data from Auckland's largest real estate agency, Barfoot & Thompson, due Wednesday. Motor vehicle registration data for July from the Motor Industry Association is scheduled for publication early this week.

Meanwhile the ANZ Commodity Price Index is due out tomorrow, ahead of the GlobalDairyTrade auction early Wednesday morning.

Statistics New Zealand will publish the country's employment data for the second quarter on Wednesday. The unemployment rate is expected to edge up to 5.9 percent from 5.8 percent as employment growth slows to 0.5 percent from 0.7 percent amid slowing labour demand, according to a Reuters poll of economists. Low inflation is expected to keep a lid on wage growth.

In the US, all eyes will be on the key non-farm payrolls data scheduled for release on Friday, which is expected to show US companies added a similar number of jobs in July to the 223,000 added in June.

At the end of last week’s Federal Reserve meeting, the Federal Open Market Committee kept alive expectations it will increase its benchmark Fed funds rate in 2015 and a solid non-farm payrolls number will keep the hiking bias in place, said OMF's Ive.

The US also has reports on manufacturing, spending, trade and consumer credit due this week.

In Australia, the focus will be on the Reserve Bank of Australia's review of interest rates tomorrow, where no change is expected. The RBA's Statement on Monetary Policy, which includes its updated economic forecasts, will be published on Friday. Australia also has data on June retail sales, trade and employment this week.

In China, the largest trading partner for New Zealand and Australia, the latest measures of manufacturing and services activity will be closely watched for signs of weakness.

In the UK, the main focus will be the Bank of England's policy meeting on Thursday, where no change is expected, and its inflation report.

The Bank of Japan reviews interest rates on Friday, with no change expected.

(BusinessDesk)

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

ScoopPro: Helping The Education Sector Get More Out Of Scoop

The ScoopPro professional license includes a suite of useful information tools for professional users of Scoop including some specifically for those in the education sector to make your Scoop experience better. More>>

Big Tax Bill Due: Destiny Church Charities Deregistered

The independent Charities Registration Board has decided to remove Destiny International Trust and Te Hahi o Nga Matamua Holdings Limited from the Charities Register on 20 December 2017 because of the charities’ persistent failure to meet their annual return obligations. More>>

57 Million Users' Data: Uber Breach "Utterly Preventatable"

Cybersecurity leader Centrify says the Uber data breach of 57 million customer and driver records - which the ride-hailing company hid for more than a year - was “utterly preventable”. More>>

Scoop 3.0: How You Can Help Scoop’s Evolution

We have big plans for 2018 as we look to expand our public interest journalism coverage, upgrade our publishing infrastructure and offer even more valuable business tools to commercial users of Scoop. More>>

Having A Cow? Dairy Product Prices Slide For Fourth Straight Auction

Dairy product prices fell at the Global Dairy Trade auction, retreating for the fourth straight auction amid signs of increased production... Whole milk powder fell 2.7 percent to US$2,778 a tonne. More>>

ALSO:

Statistics: Butter At Record $5.67/Block; High Vegetable Prices

Rising dairy prices have pushed food prices up 2.7 percent in the year to October 2017, Stats NZ said today. This followed a 3.0 percent increase in the year to September 2017. More>>

ALSO:

Science: New Research Finds Herbicides Cause Antibiotic Resistance

New University of Canterbury research confirms that the active ingredients of the commonly used herbicides, RoundUp, Kamba and 2,4-D (glyphosate, dicamba and 2,4-D, respectively), each alone cause antibiotic resistance at concentrations well below label application rates. More>>

ALSO: