Sharechat Logo

NZ dollar jumps to 16-month high on gain in dairy prices, weak US data

Wednesday 7th September 2016

Text too small?

The New Zealand dollar surged to a 16-month high after prices rose at the latest GlobaldairyTrade auction and data showed growth in the US services sector was weaker than expected.

The kiwi rose to 74.12 US cents as at 8am in Wellington from 73.16 cents late yesterday. The trade-weighted index climbed to 78.38 from 77.77, to be well above the 76 average level the Reserve Bank has projected for the third quarter.

The GDT price index climbed 7.7 percent at the latest dairy products auction, adding to expectations that a worldwide glut is easing. Whole milk powder increased 3.7 percent to US$2,793 a tonne, the highest since October last year. The rebound in dairy prices adds to positive sentiment for the kiwi dollar, which offers a reasonably attractive yield in a world where many central banks have interest rates that are near zero or negative.

"Global milk supply has been tightening more quickly in recent months prompting buyers into action," said Con Williams, agri economist at ANZ Bank New Zealand. "Where to from here will crucially depend on new season milk volumes from New Zealand and how demand holds up in the face of higher prices."

The kiwi dollar was also helped by a weaker US dollar, after the US non-manufacturing ISM composite index fell more than expected to 51.4 from 55.5, a seven-month low, suggesting the services sector in the world's biggest economy isn't as robust as economists had thought.

The kiwi rose to 96.42 Australian cents from 95.92 cents, slipped to 75.63 yen from 75.82 yen and rose to 4.9454 yuan from 4.8878 yuan. It gained to 65.85 euro cents from 65.65 cents and rose to 55.19 British pence from 54.94 pence.

BusinessDesk.co.nz



  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

NZ dollar becalmed on US-China trade/politics nexus
Govt to pull Infrastructure Commission into Auckland port imbroglio
Wind to displace diesel for Stewart Island power
Eroad's five year target: doubling unit sales
Blinky boxes and gobbledegook: tips for choosing a cyber-security vendor
Govt support for NZME/Stuff merger difficult, not impossible, says Jarden
NZ dollar stalled; US-China trade signals remain mixed
Ryman warns NZ, Australia to take population ageing more seriously
MARKET CLOSE: NZ shares fall as US-China trade concerns weigh on markets; Ryman slips
NZ dollar stalled; US-China trade deal may be postponed

IRG See IRG research reports