WELLINGTON: The New Zealand dollar rose even after dairy product prices unexpectedly fell in the latest GlobalDairyTrade auction, as the US dollar dropped on concern about weakness in the world’s biggest economy.
The kiwi jumped to 71.73 US cents at 8am in Wellington, from 71.13 cents at 5pm on Tuesday. The trade-weighted index advanced to 74.90 from 74.68.
The dollar index fell after a report showed new orders for US factory goods unexpectedly declined in April, and following comments from Federal Reserve board member Lael Brainard that the US economy’s recent poor performance might be more than transitory.
Concern about weakness in the US economy overrode any concern about the weaker dairy auction, where average prices fell to their lowest in almost six years. “Kiwi is higher because if the US dollar is going down, then clearly the kiwi/US must go up,” said Westpac’s Imre Speizer.
“We had another weak dairy auction but it didn’t matter because it’s all about the US dollar.” At the overnight auction, the price for New Zealand’s key product, whole milk powder, declined 3.1 per cent to $US2,309 ($NZ3,252) a tonne.
ANZ Bank New Zealand’s monthly commodity price index is also scheduled for release. The New Zealand dollar touched a four-month low of 64.13 euro cents, on optimism Greece would reach a deal with its creditors ahead of an International Monetary Fund payment due at the end of this week.
The local currency slipped to 92.27 Australian cents from 92.65 cents after the Reserve Bank of Australia kept its benchmark interest rate at a record low 2 per cent. The kiwi advanced to 89.01 yen from 88.65 yen and was little changed at 46.75 British pence from 46.76 pence.
