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


NZ dollar weaker on dovish RBA, softer dairy prices

By Rebecca Howard

May 22 (BusinessDesk) - The New Zealand dollar touched its lowest level since early November as signs of a rate cut across the Tasman increased the odds that local rates will go lower and as dairy prices eased.

The kiwi was trading at 65.05 at 7:45am after touching 64.98 overnight and down from 65.11 at 5pm yesterday. The trade-weighed index was at 71.85 versus 71.90.

Minutes from the latest Reserve Bank of Australia meeting and a speech by governor Philip Lowe "strongly suggest that the RBA will cut interest rates at its next meeting on June 4," said Capital Economics.

"At our meeting in two weeks' time, we will consider the case for lower interest rates," Lowe said.

The "heightened odds of a near-term rate cut from the RBA in Australia has been interpreted as a slightly higher chance of another rate cut from our own Reserve Bank of New Zealand," said Mike Shirley, a dealer at Kiwibank. That immediately weighed on the kiwi.

The New Zealand dollar was also under pressure after dairy product prices fell at the Global Dairy Trade auction, ending a record string of 11 consecutive gains. Whole milk powder declined for the fourth straight time. The GDT price index fell 1.2 percent from the previous auction two weeks ago while whole milk powder dropped 2.1 percent, in line with expectations.

Investors will now be watching for domestic retail sales data.

The New Zealand dollar was trading at 51.21 British pence from 51.16 after UK Prime Minister Theresa May outlined a new 10-point Brexit plan. Among other things, it includes an option for MPs to vote on whether a confirmatory, second referendum is needed.

"Sterling found favour after PM May puts forward the notion of a second referendum," said ANZ FX/rates strategist Sandeep Parekh. But it then fell "just as swiftly as it became apparent that this deal too would not have the support of the House."

The kiwi was at 58.28 euro cents from 58.34. It was at 71.92 yen from 71.72 and at 4.4889 Chinese yuan from 4.4921.

© Scoop Media

Business Headlines | Sci-Tech Headlines


1.5 Percent: Official Cash Rate Unchanged

The Official Cash Rate (OCR) remains at 1.5 percent. Given the weaker global economic outlook and the risk of ongoing subdued domestic growth, a lower OCR may be needed over time to continue to meet our objectives. More>>

IMF On NZ: Near-Term Boost, Risks Tilted To Downside

New Zealand's economic expansion has lost momentum and while the near-term outlook is expected to improve, risks are increasingly tilted to the downside, according to the International Monetary Fund. More>>


Traceability: NZ To Track Satellites, Eggs

The New Zealand Space Agency (NZSA) is continuing to build its capability as a regulator of space activity with a new pilot project which allows officials to see real-time information on the orbital position of satellites launched from New Zealand. More>>


OECD On NZ: NZ's Living Standards Framework Positive But Has Gaps

Treasury’s living standards framework reflects good practice internationally but has some data gaps, including in areas where New Zealand fares poorly, the Organisation for Economic Cooperation and Development says. More>>


RBNZ Act Review: Govt Plans Deposit Guarantee Scheme

The Coalition Government today announced moves to make New Zealand’s banking system safer for customers through a new deposit protection regime, and work to strengthen accountability for banks’ actions. More>>