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

 

Dollar bounces as dairy auction deflates optimism

NZ dollar bounces from month-low as dairy auction deflates optimism over local outlook

By Paul McBeth

Oct. 4 (BusinessDesk) - The New Zealand dollar recovered from a month-low after a surprise drop in dairy prices took the sheen off the local economic outlook, while data showed the housing market continued to slow down last month.

The kiwi rose to 71.80 US cents as at 5pm in Wellington from a low of 71.46 cents overnight and 71.62 cents yesterday. The trade-weighted index was little changed at 75.74 from 75.82.

Investors were surprised by 2.4 percent fall in the GDT price at the GlobalDairyTrade auction overnight after futures pricing had indicated a gain. The outcome prompted warnings from some economists that Fonterra Cooperative Group's forecast payout may be under risk, although robust growth, high terms of trade and a strong labour market still support the broader outlook relative to other developed economies. Local housing data today also showed the property market cooling in September with a sharp drop in the volume of sales in Auckland.

The auction "was a bit of a wake-up call to markets on top of clear signs of political uncertainty and the housing market that are dulling the brightness of the New Zealand economic story relative to others," said Phil Borkin, senior economist at ANZ Bank New Zealand in Auckland. "We tried to break through some pretty key support levels and didn't so we've bounced back up again through our trading session today."

Borkin said ANZ expects the kiwi dollar to fall a "little lower" over the medium term with the Reserve Bank "showing an absolute reluctance to lift rates" when other central banks are winding back stimulus.

New Zealand's two-year swap rate fell 2 basis points to 2.18 percent, and 10-year swaps dropped 4 basis points to 3.24 percent.

The Reserve Bank of Australia kept the target cash rate at 1.5 percent yesterday, and while it noted improving employment and investment, economists still don't see the RBA moving on rates until next year, earlier than New Zealand's central bank. The kiwi fell to 91.34 Australian cents from 91.81 cents yesterday.

The local currency traded at 54.13 British pence from 54.04 pence yesterday and dipped to 61.03 euro cents from 61.17 cents. It decreased to 80.90 yen from 81.01 yen yesterday and gained to 4.7791 Chinese yuan from 4.7651 yuan.

(BusinessDesk)

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 




Energy: New Zealand Could Be World’s First Large-scale Producer Of Green Hydrogen

Contact Energy and Meridian Energy are seeking registrations of interest to develop the world’s largest green hydrogen plant. The plant has the potential to earn hundreds of millions in export revenue and help decarbonise economies both here and overseas... More>>


MBIE: 36th America’s Cup Post-event Reports Released

Post-event reporting on the 36th America’s Cup (AC36) has been released today. The reports cover the delivery of the event by Crown, Council and America’s Cup Event Limited, economic impacts for Auckland and New Zealand, and delivery of critical infrastructure... More>>

Fonterra: Farmer Feedback Set To Shape Revised Capital Structure Proposal

With the first phase of Fonterra’s capital structure consultation now complete, the Co-op is drawing up a revised proposal that aims to reflect farmers’ views. A number of changes are being considered to the preferred option initially put forward in the Consultation Booklet in May... More>>




Statistics: Household Saving Falls In The March 2021 Quarter

Saving by New Zealanders in the March 2021 quarter fell to its lowest level in two years after rising sharply in 2020, Stats NZ said today. Increases in household spending outpaced income growth, leading to a decline in household saving from the elevated levels that prevailed throughout 2020... More>>

ALSO: