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NZ dollar falls below US70 cents

NZ Newswire logoNZ Newswire 6/03/2017 Jonathan Underhill

The New Zealand dollar fell below US70c, reaching an eight-week low on expectations of US Federal Reserve rate hikes starting this month and ahead of a dairy auction the futures market is predicting will see prices fall.

The kiwi dollar traded at US69.95c as at 8am in Wellington, having fallen to US69.84c, the lowest since January 12, from US70.11c late on Monday (NZT).

The trade-weighted index fell to 76.59, the lowest since last October, from 76.74.

NZX dairy futures are pointing to an 8 per cent decline in whole milk powder at tonight's GlobalDairyTrade auction, in the second straight decline, after improved weather conditions prompted Fonterra Cooperative Group to increase the amount of product it's offering in coming auctions on the GDT platform by about 25,000 tonnes.

The kiwi was already in retreat after Federal Reserve chair Janet Yellen indicated rate hikes would likely start this month, while reports North Korea fired four missiles into the sea off Japan also sapped risk appetite.

"An expected chunky fall in dairy prices in the GDT auction tonight isn't helping sentiment," Bank of New Zealand currency strategist Jason Wong said.

"A mild risk-off tone has pervaded the market as investors ponder the outlook under a Fed plan to step up the pace of monetary policy normalisation."

Ahead of Tuesday night's dairy auction, Reserve Bank deputy governor Grant Spencer is scheduled to give a speech at 11am titled Review of Bank Capital Requirements.

Also out on Tuesday, the Reserve Bank of Australia releases a statement on its review of interest rates in the afternoon, although no change is expected.

The New Zealand dollar fell to A92.26c, having earlier touched A92.07c, the lowest since May last year, from A92.54c late yesterday.

The local currency traded at 57.13 British pence from 57.05 pence and was at 66.07 euro cents from 66.09 cents. It dropped to 79.69 yen from 79.79 yen and fell to 4.8234 yuan from 4.8336 yuan.

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