NZ dollar hits seven-month low
The New Zealand dollar has dropped below US83 cents for the first time in seven months after another dairy price slump.
The dollar dropped from US83.4c to just under US83c shortly after 2am today when a 6 per cent price drop at the GlobalDairyTrade auction was announced.
It quickly bounced back above US83c and was trading at US83.1c shortly before noon.
"But offsetting the bad news for Fonterra (and other dairy producers), the NZ dollar actually responded to the declines, unlike the negative auctions earlier in the year," BNZ currency strategist Raiko Shareef said in a research note.
"Yesterday, the ANZ commodity price index fell by 3.3 per cent month on month in August, reflecting falls in dairy prices, offset by gains in beef and aluminium.
"Overall, though, prices for New Zealand's exports sit at a 17-month low."
The kiwi was not the only currency to fall overnight against the United States dollar, which had a day of gains.
CMC chief markets analyst Ric Spooner said markets were getting serious about adjusting for rising US interest rates.
"This saw significant gains in the US dollar which flowed through to lower commodity prices," he said.
"It seems traders have decided that the time has come to get out in front of the Fed before it changes its language and starts to move to a tightening bias on rates.
"The August manufacturing PMIs highlight the rationale for this. The US [figure] of 59 contrasts with Europe and China, where PMIs are languishing at 50.7 and 51.1 respectively."
The kiwi fell against most major currencies after the dairy auction and was trading at A89.5c, 50.4p, 63.2 euro cents and 87.4 yen just before noon.