WELLINGTON: The New Zealand dollar dropped to a new six-month low ahead of tonight’s dairy auction, which may see prices little changed, as traders became more risk averse in subdued pre-Christmas trading. The kiwi traded at 69.27 US cents as at 8:30am in Wellington and earlier touched 69.22 cents, the lowest since June, from 69.79 cents late yesterday. The trade-weighted index fell to 77.26 from 77.58.
While indicators of the New Zealand economy are upbeat and speculation is growing that the Reserve Bank will begin raising interest rates toward the end of 2017, the local story has been trumped by a buoyant US dollar, thanks to US president-elect Donald Trump’s promises to cut taxes and spend more and the Federal Reserve’s plans to raise interest rates faster than the market had expected. The US dollar index picked up after Fed chair Janet Yellen noted the strength of the US labour market in a speech. Meanwhile traders say whole milk powder futures suggest a decline in the price of the commodity in tonight’s GlobalDairyTrade auction.
“The NZD and AUD remained under pressure during a mostly quiet session for global markets,” said Imre Speizer, senior markets strategist at Westpac Banking Corp, in a note. “Momentum remains negative, thanks to the post-FOMC surge in the US dollar last week,” he said, adding that the next “major multi-day target” for the kiwi dollar is about 68 US cents. The kiwi traded at 95.5 Australian cents from 95.64 cents late yesterday. The local currency slipped to 4.8182 yuan from 4.8462 yuan and declined to 81.31 yen from 81.96 yen. It traded at 66.66 euro cents from 66.71 cents and was little changed at 55.91 British pence.
