Dairy Prices Underpin Kiwi
A stellar result from last night’s Fonterra’s milk price auction has added more juice to a rally by the New Zealand dollar, says Mike Jones, Strategist, Markets, for the BNZ.
Dairy prices jumped 16.9%, on average, more than reversing last month’s 8.3% fall and halting the trend decline in prices seen over the past four months.
“In our view, this reduces the downside risk on Fonterra’s 2010/11 forecast payout of $6.90-$7.10 per kg/ms,” says Jones.
“We said yesterday that, despite fading local fundamentals, the strength of global data would dictate the near-term direction in the NZD.
“With the NZD/USD now close to the top end of its recent 0.6990-0.7140 range, we’ll have to see more upbeat data to keep risk appetite underpinned and sustain the NZD/USD’s gains.”
See Moneymarket for BNZ report on world rally, Australia’s surge…
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