Thursday 19th October 2017
|Text too small?|
The New Zealand dollar drifted lower as the market awaits an announcement on the formation of the new government, amid reports that details of the negotiations between the NZ First, Labour and National parties are becoming protracted.
The New Zealand dollar was trading at 71.29 US cents as at 5pm versus 71.44 US cents as at 8am in Wellington from 71.59 cents late yesterday. The trade-weighted index was at 75.18 from 75.37. The currency has been largely rangebound waiting for an announcement.
NZ First said yesterday that it intended to make an announcement today and that leader Winston Peters had given a heads up to Bill English and Jacinda Adern. However, by late afternoon there was still no announcement. In the meantime, the kiwi was getting pushed around by different news reports, in particular regarding a possible delay due to NZ First pushing for at least five ministerial posts, according to NBR.
Mark Johnson, senior dealer at OMF, said the kiwi will likely react to any government formation announcement but the move will be shortlived. If it falls the downside will likely be limited by profit-takers, he said. If it is squeezed higher any upside will "create some good selling opportunities when you consider potential dollar strength," he said.
Outside of the election news, Johnson noted that Bank of New Zealand lowered its milk payout forecast for the current season from $6.75 to $6.30 after another weak dairy auction this week.
"We see downward pressure on dairy prices persisting over the near term, with EU stockpiles of skim milk overhanging the market, and dairy prices still look a bit stretched relative to international oil and grain prices. Lower dairy prices support our view of the NZD heading to our year-end target of USD0.70 by year end, and being anchored around 0.69 through the first half of next year," BNZ said in a note.
Johnson noted the downgrade followed ANZ's yesterday. "This is something to keep in mind as it would be negative for the kiwi."
The kiwi fell to 53.96 British pence from 54.29 pence yesterday and declined to 90.80 Australian cents from 91.16 cents. It traded at 4.7273 yuan from 4.7317 yuan and rose to 80.50 yen from 80.34 yen. It fell to 60.40euro cents from 60.82 cents.
New Zealand's two-year swap rate rose 1 basis point to 2.20 percent while 10-year swaps rose 3 basis points to 3.20 percent.
No comments yet
NZ dollar heads for 1.2% weekly fall as greenback finds favour on rate hike view
Seeka annual profit falls 44% on lower kiwifruit volumes, impaired banana business
Pyne Gould first-half profit gains on Wilaci settlement
Steel & Tube may be interested in Fletcher assets if review prompts sales, CEO Malpass says
Northport upbeat on regional fund, helps lift Marsden Maritime 1H profit 5.4%
Countdown supermarkets 1H earnings fall 7.7% on rising cost of investment
Regional growth fund trickle today becomes avalanche in election year
Port of Tauranga's Cairns says export growth in 1H suggests 'economy in not too bad a shape'
NZ quarterly retail sales rise 1.7% in 4th-qtr, adding to upbeat electronic cards data
Kiwibank first-half profit sinks 32% as IT costs mount