New Zealand Dollar Gets a Welcome Boost from Dairy Auction
- Written by: Sam Coventry
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Image © Adobe Images
According to analysts, the New Zealand Dollar has found some support following a welcome rise in dairy prices.
The bi-monthly GDT dairy auction resulted in an overall price rise of 2.8%, with whole milk powder up 3.4%, making for the first rise since February.
"NZD is receiving some support from decent dairy prices. Whole milk powder (WMP) prices rebounded at the latest GDT auction overnight, following a series of falls at recent auctions. WMP prices rose 3.4% at the overnight auction," says Kristina Clifton, an analyst with Commonwealth Bank.
The New Zealand Dollar is the day's best-performing G10 currency, suggesting idiosyncratic support stemming from the dairy auction.
The Pound-New Zealand Dollar is at 2.1055, the Euro-New Zealand Dollar at 1.8030 and the New Zealand-U.S. Dollar rate at 0.5972.
Dairy products are New Zealand's largest export and are a major foreign exchange earner, which is why analysts watch the GDT auction when considering the NZ Dollar.
Analysts say the pick up in milk prices is linked to a return to the market by Chinese buyers.
A slowdown in China has weighed on global commodity prices which has in turn weighed on the performance of the so-called commodity currencies, such as the New Zealand Dollar.
This positive GDT auction offers another piece of evidence the worst of the Chinese slowdown has passed.
