NZ dollar little changed ahead of GDT auction tonight

Tuesday 20th October 2015

The New Zealand dollar was little changed ahead of tonight's GlobalDairyTrade auction where prices are expected to consolidate following four consecutive increases, after nearly six months of declines.

The kiwi was at 67.98 US cents at 8am in Wellington, from 67.97 cents at 5pm yesterday. The trade-weighted index was at 72.85 from 72.72 yesterday.

The local currency has gained 6 percent so far this month as analysts pull back expectations for interest rate hikes in the US and factor in better prospects for the local economy following the gains in dairy product prices, the country's largest commodity export. The kiwi may consolidate this week as the futures market suggests prices will stabilise at tonight's GDT auction, analysts said.

"The kiwi does remain under a bit of pressure at the moment ahead of the GDT auction tonight," said Stuart Ive, senior dealer, foreign exchange at OMF in Wellington. "We have seen the resurgence in the milk prices recently, but we expect tonight that the auction may actually come in flat, maybe even a small down."

OMF's Ive said traders may take the opportunity to bank profits after the local currency's recent rise.

"We are coming from elevated levels so clearly the path of least resistance will probably be lower at the moment," Ive said.

Currency traders are entering a period of consolidation ahead of the Federal Reserve policy meeting next week, and upcoming speeches by Fed officials aren't expected to include comment on policy, he said.

Today, the Reserve Bank of Australia publishes the minutes to its last meeting, however this is unlikely to offer any new information, Ive said. The kiwi advanced to 93.69 Australian cents from 93.43 cents yesterday.

The New Zealand dollar gained to 60.02 euro cents from 59.81 cents yesterday, slipped to 43.94 British pence from 44.01 pence, edged up to 81.20 yen from 81.16 yen, and was unchanged at 4.3229 yuan.

(BusinessDesk)

BusinessDesk.co.nz

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