NZ dollar slips as dairy prices rise as expected, Wheeler's select committee appearance awaited

Wednesday 7th December 2016

The New Zealand dollar fell as dairy prices rose as expected in the latest GlobalDairyTrade auction and traders looked ahead to Reserve Bank governor Graeme Wheeler's appearance at the parliament today, which may give him scope to comment on monetary conditions.

The kiwi dollar fell to 71.08 US cents as at 8am in Wellington, and earlier dipped as low as 70.98 cents, from 71.33 cents late yesterday. The trade-weighted index fell to 77.96 from 78.20.

Whole milk powder climbed 4.9 percent to US$3,593 a tonne at the auction overnight, meeting expectations as the total volume of dairy products sold on the platform fell to 22,472 tonnes from 23,902 tonnes at the previous auction. It was the eighth gain in nine auctions, reflecting a decline in supply. Wheeler is due to appear before the finance and expenditure select committee this morning to answer questions on the annual review of the bank. The US dollar index rose overnight as the euro fell against the greenback.The GDT auction "provided no significant surprise," said Kymberly Martin, senior market strategist at Bank of New Zealand, in a note. "Fundamentals suggest the risks are tilted toward near-term price gains, but potential for some consolidation during 2017."

While Wheeler is talking about the central bank's annual report today, "there is potential for market relevant discussions," she said.

Investors are also awaiting Australian third-quarter gross domestic product today, which is expected to show a 0.1 percent decline after a gain of 0.5 percent three months earlier. The kiwi declined to 95.35 Australian cents from 95.82 cents yesterday, when the Reserve Bank of Australia kept its key rate unchanged.

The kiwi traded at 66.33 euro cents from 66.44 cents late yesterday. It fell to 4.8889 yuan from 4.9115 yuan, dropped to 81.07 yen from 81.36 yen and traded at 56.08 British pence from 56.11 pence.

BusinessDesk.co.nz

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