NZ dollar declines

new zealand dollar3The New Zealand dollar fell as Fonterra cut its forecast farmgate payout on weak global dairy prices.

Meanwhile the greenback was buoyed by the prospect of major US tax reform triggering the repatriation of US dollars.

The kiwi declined to US68.76c as at 0800 in Wellington from US68.96c late on Wednesday.

The trade-weighted index decreased to 72.73 from 72.83.

Fonterra lowered its forecast payment to farmers by 35 cents to $6.40 per kilogram of milk solids, matching economists’ expectations for a reduced payout after several subdued auctions on the GlobalDairyTrade platform.

New Zealand property values also crept up in the latest Quotable Value figures on Thursday.

Meanwhile, the US dollar index increased 0.2 per cent after private payrolls figures met expectations and amid growing optimism US legislators will pass major tax reform which Bank of America estimates will trigger a rally in the greenback next year.

“The fact the kiwi is hanging in there despite a stronger USD may reflect Fonterra’s downgrade perhaps not being as large as feared and also better QV house prices,” ANZ Bank New Zealand senior economist Phil Borkin said.

“It highlights a reasonable base of support at present.”

Local data on Thursday includes the September quarter wholesale trade figures, while the government is expected to release the briefings to incoming ministers from various departments.

The kiwi dollar rose to 87.94 Canadian cents from 87.54 cents on Wednesday after the Bank of Canada kept its benchmark interest rate at 1 per cent and said it would adopt a cautious approach in future reviews.

The local currency was little changed at A90.89c from A90.93c on Wednesday after figures showed Australia’s economy grew at a slower pace than expected, and ahead of trade data across the Tasman on Thursday.

The kiwi dollar traded at 51.39 British pence from 51.32 pence on Wednesday and 58.31 euro cents from 58.22 euro cents as the UK’s negotiations with the European Union over its exit from the regional bloc remain tense.

The local currency slipped to 77.15 yen from 77.37 yen on Wednesday and fell to 4.5475 Chinese yuan from 4.5617 yuan.


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