NZ dollar gains after failing to break below support levels; dairy prices fall

Wednesday 4th April 2018

The New Zealand dollar gained after failing to break below its recent support levels and as global risk sentiment improved.

The kiwi dollar traded at 72.54 US cents as at 8am in Wellington from 72.26 cents late yesterday. It dropped as low as 71.84 cents, around a level it has only broken below a handful of times this year. The trade-weighted index rose to 74.55 from 74.20.

US stocks rebounded after a selloff at the start of the week and the Chicago Board Options Exchange Volatility Index (VIX), known as Wall Street's fear gauge, fell about 10 percent to 21.21. Commodity-linked currencies strengthened and the kiwi dollar held onto its gains even as dairy product prices fell for the fourth straight auction overnight, although whole milk powder gained 1.6 percent.

"NZD rebounded with better risk sentiment overnight," Con Williams, rural economist at ANZ Bank New Zealand, said in a note. "The NZD continues to appear relatively resilient to attempts to move lower for now, dips under 0.72 are being well supported."

Dairy product prices fell at the Global Dairy Trade auction, led by anhydrous milk fat. The GDT price index slipped 0.6 percent from the previous auction two weeks ago. Some 17,222 tonnes of product was sold, down from 18,635 tonnes two weeks ago. Whole milk powder rose 1.6 percent to US$3,278 a tonne.

In New Zealand today, traders will be watching for the ANZ Consumer Confidence survey for March while Australia has February building approvals and retail sales.

The kiwi dollar rose to 59.11 euro cents from 58.70 cents late yesterday after the European Markit PMI came in at 56.6 in March, in line with initial estimates and down from 58.6 in February.

The kiwi gained to 94.43 Australian cents from 93.94 cents yesterday, when the Reserve Bank of Australia kept its key rate at 1.5 percent.

The New Zealand dollar jumped to 77.33 yen as risk sentiment improved from 76.55 yen yesterday. It rose to 4.5614 yuan from 4.5428 yuan and gained to 51.60 British pence from 51.39 pence.

(BusinessDesk)

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