NZ dollar slips vs. Australian dollar, yen ahead of dairy auction
The New Zealand dollar fell against the Australian dollar and the yen ahead of the latest GlobalDairyTrade auction overnight, on speculation prices will fall for a second straight sale amid increased supply of milk powder.
The kiwi fell to 97.87 Australian cents as at 5pm in Wellington, from 98.09 cents yesterday, retreating from the post-float high of 98.43 cents earlier this week. The local currency fell to 89.35 yen from 89.94 yen, and traded at 74.76 US cents from 74.79 cents yesterday.
Dairy futures have declined on the NZX since Fonterra Cooperative Group said last month it will increase the amount of product it offers through the GDT platform, suggesting prices will fall in the auction. Prices surged in February on speculation dry weather would reduce milk supplies this season but have since reversed as rain returned to some regions.
"At the last auction on March 17th, dairy prices dropped 8.8%, sending the New Zealand dollar sharply lower," said Kathy Lien, managing director at BK Asset Management in New York. "If prices fall again it could take NZD/USD below 0.74."
The kiwi didn't move much after data from state-owned valuer Quotable Value showed residential property values climbed at the fastest pace in nine months in March, led by strong demand in Auckland. National property values rose 7.7 percent over the past year. Auckland, the country's most populous and fastest growing city, led the index higher, with property values advancing 13.9 percent. The Reserve Bank has been watching for overheating in the property market that could spill into general inflation.
The trade-weighted index fell to 78.46 from 78.67. The kiwi fell to 50.27 British pence from 50.59 pence yesterday and rose to 69.30 euro cents from 69.22.