- NZD / USD gains from the monthly high of 0.6159 faltered the day before.
- Fonterra reduced the forecast for soft prices for 2019-20 to NZ $ 7.10 – NZ $ 7.30 / kg due to weak global demand.
- RBNZ chief economist Ha does not suggest any rate changes until March 2021.
- The markets remain risky, with actions encouraging signs of further monetary / fiscal easing.
The NZD / USD is struggling to justify mixed indications of declining profits from RBNZ chief economist Ha and Fonterra, while taking turns at 0.6145 at the start of Thursday’s Asian session. The pair hit a monthly high of 0.6159 the previous day, amid general weakness in the US dollar and a sense of market risk supported by equities.
Fonterra lowers milk price forecast….
The main New Zealand dairy producer Fonterra has responded to market expectations for a reduction in milk price forecasts affected by the coronavirus crisis (COVID-19). The dairy giant is now forecasting a 2019-2020 milk price of $ 7.10 NZ to $ 7.30 NZ / kg compared to the previous forecast between $ 7 and $ 7.60 / kg. The earnings report cites weaker global demand as a catalyst for reducing the estimate of soft prices. The main economic player also forecasts a 2020-2021 milk price of 5.40 to 6.90 NZ $ / kg. It should also be noted that the dairy leader recorded a 59% increase in its underlying profits over nine months.
It should be mentioned that analysts at the Australian and New Zealand (ANZ) banking group have already anticipated such a drop while saying, “No matter where the price lands, it will be significantly lower than the 2019-2020 season for which Fonterra s ‘expects to pay its suppliers a milk price between $ 7 and $ 7.60 / kg. “
Ha de RBNZ maintains its support until March 2021…
In his speech at the last webinar, RBNZ chief economist Yuong Ha was in favor of no rate changes until March 2021. The member of the central bank’s board of directors expected earlier to a fall in house prices and a collapse in migration.
Following the catalysts, the Kiwi retreats to prolong the gains of the previous day while also refraining from a sharp fall. The rating reached its highest level in a month Wednesday against a background of general weakness in the US dollar, while also benefiting from the rise in stocks. In doing so, the NZD / USD prices seem to have ignored the USA-China and Aussie-Sino fights.
Although there have been a few catalysts suggesting a further weakness in the greenback, despite FOMC minutes reiterating support for flexible monetary policy, Wall Street has benefited from general expectations of further monetary / fiscal easing from major central banks / governments.
That said, traders in the pair now have a few catalysts to watch out for, aside from waiting for second-level activity figures earlier this month from Australia. However, updates regarding the trade wars and the virus remain important to follow.
Unless you break the EMA at 100 days and the April peak, around 0.6170 / 75, the pair of kiwis is less likely to avoid a decline to 0.6100.