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


NZ dollar falls as dairy, other commodity prices decline

NZ dollar falls as dairy, other commodity prices decline; RBNZ looms

By Jonathan Underhill

Nov. 8 (BusinessDesk) - The New Zealand dollar fell, reversing yesterday's gains, as prices for dairy products and other commodities declined and traders looked ahead to tomorrow's policy statement from the Reserve Bank.

The dropped fell to 68.97 US cents as at 8am in Wellington from 69.32 cents late yesterday. The trade-weighted index slipped to 73.34 from 73.52.

Dairy product prices fell 3.5 percent in the GDT auction, with whole milk powder falling 5.5 percent to US$2,852 a tonne, stoking speculation that Fonterra Cooperative Group may have to lower its forecast 2017/18 payout, which it reiterated last week at $6.75 per kilogram of milk solids plus earnings per share in a range of 45-to-55 cents. The CRB Index of 19 commonly traded commodities fell 0.4 percent from a nine-month high. Meanwhile, tomorrow's monetary policy statement is expected to include revised economic forecasts with the TWI well below the level projected in its last MPS.

"We downgraded our 2017/18 milk price forecast to $6.25-$6.50/kgMS last month, and at face value, today’s result warrants some further caution," said Philip Borkin, senior economist at ANZ Bank New Zealand, in a note. "However, with the NZD/USD down around 4 percent since the mid-October auction, it shouldn’t be forgotten that there are some other key factors supporting the local farm-gate returns."

He expects the Reserve Bank "to still be somewhat cautious tomorrow, which could perhaps disappoint a market that is arguably looking for a slightly more hawkish tone," he said. The kiwi had gained yesterday after Finance Minister Grant Robertson and acting Reserve Bank governor Grant Spencer re-signed the existing policy targets agreement and Robertson said a two-phase review is planned that will give the bank a dual mandate of employment and inflation and will also introduce a committee-making decision model in the initial phase.

Economists are expecting the RBNZ to keep rates on hold at record low 1.75 percent. However, there is some risk it could be more hawkish in its forecasts given the sharply weaker New Zealand dollar, emerging signs of inflation and the new government's fiscal policy, which will also generate inflation.

Traders will also be keeping an eye on the opening of the parliament, with the governor general's "speech from the throne" possibly containing clues to the government's policy programme.

The kiwi fell to 4.5789 yuan from 4.5915 yuan and declined to 52.42 British pence from 52.60 pence. It fell to 59.56 euro cents from 59.70 cents and dropped to 78.58 yen from 78.97 yen. It traded at 90.29 Australian cents from 90.16 cents yesterday.



© Scoop Media

Business Headlines | Sci-Tech Headlines


Stats NZ: Consents For New Homes At All-Time High

A record 41,028 new homes have been consented in the year ended March 2021, Stats NZ said today. The previous record for the annual number of new homes consented was 40,025 in the year ended February 1974. “Within 10 years the number of new homes ... More>>

Stats NZ: Unemployment Declines As Underutilisation Rises

The seasonally adjusted unemployment rate decreased to 4.7 percent in the March 2021 quarter, continuing to fall from its recent peak of 5.2 percent in the September 2020 quarter but remaining high compared with recent years, Stats NZ said today. ... More>>


Digitl: The Story Behind Vodafone’s FibreX Court Ruling

Vodafone’s FibreX service was in the news this week. What is the story behind the Fair Trading Act court case? More>>

Reserve Bank: Concerned About New Zealand's Rising House Prices

New Zealand house prices have risen significantly in the past 12 months. This has raised concerns at the Reserve Bank of New Zealand – Te Putea Matua about the risk this poses to financial stability. Central banks responded swiftly to the global ... More>>

Westpac: Announces Strong Financial Result

Westpac New Zealand (Westpac NZ) [i] says a strong half-year financial result has been driven by better than expected economic conditions. Chief Executive David McLean said while the global COVID-19 pandemic was far from over, the financial effect on ... More>>

MYOB: SME Confidence In Economic Performance Still Cautious

New insights from the annual MYOB Business Monitor have shown the SME sector is still cautious about the potential for further economic recovery, with two-in-five (41%) expecting the New Zealand economy to decline this year. The latest research ... More>>