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NZ dollar opens higher as dairy prices lift, oil eases

Wednesday 18th September 2019

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The New Zealand dollar lifted against the greenback, helped by a positive overnight global dairy auction.

The kiwi was trading at 63.56 US cents at 7:55 am in Wellington from 63.31 US cents at 5pm yesterday. The trade-weighted index was at 70.50 from 70.37.

The GDT price index climbed 2 percent from the previous auction two weeks ago. The average price was US$3,303 a tonne, up from US$3,202. Whole milk powder rose 1.9 percent to US$3,133 a tonne.

The kiwi “finds its feet following a stronger than expected GDT auction. Meanwhile, the USD softened alongside oil prices as supply fears eased,” said ANZ FX/rates strategist Sandeep Parekh.

Global markets stabilised after news reports that Saudi Arabia would return to normal oil production levels by the end of the month. Brent crude fell to US$64 a barrel, down from US$69 late Monday.

Energy Minister Prince Abdulaziz bin Salman told media 50 percent of crude production cut from the attack has been restored and production capacity would reach 10 million barrels of crude per day by the end of September and 12 million barrels by the end of November.

The focus is now firmly on the US Federal Reserve, which is due to publish its rate decision early Thursday New Zealand time. Markets are expecting a second 25 basis-point rate cut to a range of 1.75 percent to 2.00 percent.  

Following that, investors will focus on New Zealand's second-quarter gross domestic product number, also on Thursday. 

The median in a Bloomberg poll predicts gross domestic product expanded 0.4 percent in the three months ended June 30, slowing from a 0.6 percent pace of growth in the March quarter, and below the Reserve Bank's forecast 0.5 percent.

The New Zealand dollar was at 92.56 Australian cents from 92.61. It was at 50.83 British pence from 50.98, at 57.40 euro cents from 57.49, at 68.74 yen from 68.51 and at 4.5067 Chinese yuan from 4.3350.

(BusinessDesk)

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