Wednesday 3rd April 2019
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The New Zealand dollar opened weaker, as dour business confidence added to the prospects of a domestic rate cut and as whole milk powder prices dipped overnight.
The kiwi was trading at 67.43 US cents at 8am versus 67.76 US cents at 5pm in Wellington. The trade-weighted index was at 73.31 from 73.62.
Yesterday's quarterly survey of business opinion from the New Zealand Institute of Economic Research - seen as a key input in the Reserve Bank's projections - has local economists convinced that the cash rate is heading lower. Several economists now expect the central bank to cut the rate in May.
Dairy product prices increased 0.8 percent at the Global Dairy Trade auction overnight, rising for the ninth straight time. Whole milk powder, however, fell 1.3 percent to US$3,287 a tonne. The decline “reflects weaker demand across our markets, particularly North Asia, and follows eight consecutive increases in average prices since December 2018,” NZX dairy analyst Robert Gibson said.
"Kiwi suffers post-QSBO blues. A weak GDT auction coupled with broad USD strength added more downside pressure overnight," said ANZ FX/rates strategist Sandeep Parekh.
The kiwi also fell against the British pound and was trading at 51.43 pence from 51.84 yesterday despite ongoing uncertainty around Brexit ahead of the April 12 deadline to reach an agreement with the European Union. The pound may have been shored up after stronger-than-expected UK manufacturing data overnight.
The kiwi was also slightly weaker against the Australian dollar, despite the fact that the Reserve Bank of Australia "kept the door to cutting more than a little ajar," said Mike Shirley, senior dealer at Kiwibank. A lift in iron ore prices may have helped the Aussie overnight, he noted.
The kiwi was trading at 95.47 Australian cents from 95.57 Australian cents. It was at 60.23 euro cents from 60.48, at 75.10 Japanese yen from 75.47 and at 4.5328 Chinese yuan from 4.5529.
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