NZ dollar little changed vs. greenback after Fonterra forecast
By Paul McBeth
May 28 (BusinessDesk) - The New Zealand dollar was little changed against the greenback after Fonterra Cooperative
Group's forecast 2016 payout largely met expectations, and gained against the Australian dollar after Australian capital
expenditure disappointed investors.
The kiwi traded at 72.37 US cents at 5pm in Wellington from 72.43 cents at 8am and 72.51 cents yesterday. It rose to
94.23 Australian cents from 93.53 cents yesterday.
Fonterra trimmed its forecast payout to farmers this season by 10 cents to $4.40 per kilogram of milk solids, and
expects to pay $5.25 next season, largely in line with economist forecasts. Dairy prices plunged last year as Chinese
buyers left the market, having built up hefty stockpiles in 2013, and today's forecast is picking a slow return from the
world's most-populous nation to underpin a lift in prices in the coming year.
"We were picking something between $5 and $5.25 and that's exactly what happened," said Tim Kelleher, head of
institutional FX sales NZ at ASB Institutional in Auckland. "Either way you paint it, it's still not a great number and
still a lot of hit and hope in the forecast."
Kelleher said the kiwi ended up largely unchanged against the greenback after the news.
Australian government data today showed first-quarter capital expenditure fell 4.4 percent, more than the 2.2 percent
expected by economists. That prompted a sell-off in the Australian dollar and pushed the kiwi to a three-week high
against its trans-Tasman counterpart.
"It's sentiment more than anything else, though iron ore futures are also down," Kelleher said.
Traders will keep an eye on US data during the New York session ahead of the US first-quarter gross domestic product's
second estimate on Friday in Washington, with investors second-guessing whether the Federal Reserve will go through with
a rate hike this year.
Reserve Bank of New Zealand data today showed the central bank didn't intervene in foreign exchange markets in April,
with net sales totalling $6 million in the period.
New Zealand's two-year swap rate increased to 3.38 percent at 5pm in Wellington from 3.37 percent yesterday, and the
10-year swap rate fell to 3.94 percent from 3.98 percent.
The kiwi gained to 89.80 yen at 5pm in Wellington from 89.25 yen yesterday, and slipped to 4.4866 Chinese yuan from
4.4983 yuan. The local currency declined to 66.30 euro cents from 66.56 cents yesterday, and was little changed 47.12
British pence from 47.06 pence.
The trade-weighted index was at 75.90 from 75.88 yesterday.
(BusinessDesk)