NZ dollar little changed ahead of dairy auction, central bank meetings

Tuesday 20th September 2016

The New Zealand dollar was little changed ahead of the latest dairy auction tonight and statements from the Bank of Japan, Federal Reserve and Reserve Bank of New Zealand this week.

The kiwi traded at 72.88 US cents as at 8am in Wellington, from 72.97 cents late yesterday. The trade-weighted index was at 77.79 from 77.86.

NZX dairy futures suggest whole milk powder could climb 9 percent in the latest GlobalDairyTrade auction, which would mark the fifth successive gain for the benchmark product, adding to positive sentiment for the New Zealand economy and the dollar. Meanwhile, traders say the Bank of Japan tomorrow may unveil additional stimulus measures in the hope of weakening the yen, which has strengthened against the greenback this year. The Fed and the RBNZ, by contrast, are likely to keep policy unchanged.

"The market is beginning to have that ‘wait and see’ feel about it ahead of the key event risks this week," said Kymberly Martin, senior market strategist at Bank of New Zealand. The dairy auction may produce "another decent gain in price at this event in the backdrop of falling production in many key areas around the world" which may "help to sustain the NZD/USD ahead of the potential for greater volatility later in the week, inspired by the meetings of the US Fed and RBNZ".

The kiwi traded at 55.94 British pence from 55.96 pence and was at 96.75 Australian cents from 96.85 cents. It fell to 4.8575 yuan from 4.8656 yuan and traded at 65.22 euro cents from 65.32 cents. The kiwi declined to 74.25 yen from 74.46 yen.

BusinessDesk.co.nz

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