New Zealand Dollar Up Late on Broad U.S.Dollar Weakness

 
   By Lucy Craymer 
 

        WELLINGTON, New Zealand--The New Zealand dollar was higher late Wednesday, benefiting from broad U.S. dollar weakness overnight.
        Kymberly Martin, Bank of New Zealand strategist, said that in a reversal of recent fortunes, it was a strong night for commodities and a poor night for equities and the U.S. dollar, while the Japanese yen was the strongest performer. The Australian dollar rose against the U.S. dollar as well.
        However, early in trading the New Zealand dollar came under pressure after Fonterra Co-Operative Group lowered its forecast milk price payout to NZ$4.60 per kilogram of milk solid from NZ$5.30 per kilogram of milk solid. Any move in the payout tends to have a significant impact on the New Zealand dollar as dairy forms the backbone of the economy, representing around 25% of exports. The bulk of these exports come from Fonterra, which produces about a third of the world's traded dairy products.
        ANZ senior foreign exchange manager Sam Tuck said that while a cut had been expected, the Fonterra forecast milk payout came in at the bottom of the market's expected range.
        In late Wellington trading, the New Zealand dollar was at US$0.7692 from US$0.7630 late Tuesday. It was at A$0.9270, compared with A$0.9262 Tuesday.
        The focus now turns to New Zealand's central bank meeting Thursday. A Wall Street Journal poll of 14 economists unanimously see the central bank keeping the rate at 3.5% until the fourth quarter of 2015. The median from the economists that were polled is for the cash rate to be at 3.88% by the end of 2015.
        Westpac currency strategist Imre Speizer said the New Zealand's central bank is expected to hold the cash rate at 3.50%, with the interest rate forecasts likely to be downgraded.
        "This is already priced in so market reaction should be trivial. However, the risks are skewed towards a more dovish outcome," he added.
        Write to Lucy Craymer at lucy.craymer@wsj.com, @lucy_craymer
        (END) Dow Jones Newswires

        December 09, 2014 23:49 ET (04:49 GMT)

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