Dollar falls as dairy drops

New Zealand dollar falls as dairy and other commodity prices decline

Dollar falls as dairy drops
The dollar fell, reversing yesterday's gains, as prices for dairy products and other commodities declined and traders looked ahead to tomorrow's policy statement from the Reserve Bank, BusinessDesk reported last night.

The dropped fell to 68.97 US cents as at 8am in Wellington from 69.32 cents late yesterday. The trade-weighted index slipped to 73.34 from 73.52.

Dairy product prices fell 3.5% in the GDT auction, with whole milk powder falling 5.5% to US$2,852 a tonne, stoking speculation that Fonterra Cooperative Group may have to lower its forecast 2017/18 payout, which it reiterated last week at $6.75 per kilogram of milk solids plus earnings per share in a range of 45-to-55 cents.

The CRB Index of 19 commonly traded commodities fell 0.4 percent from a nine-month high. Meanwhile, tomorrow's monetary policy statement is expected to include revised economic forecasts with the TWI well below the level projected in its last MPS.

Economists are expecting the RBNZ to keep rates on hold at record low 1.75%. However, there is some risk it could be more hawkish in its forecasts given the sharply weaker New Zealand dollar, emerging signs of inflation and the new government's fiscal policy, which will also generate inflation.

Traders will also be keeping an eye on the opening of the parliament, with the governor general's "speech from the throne" possibly containing clues to the government's policy programme.

The kiwi fell to 4.5789 yuan from 4.5915 yuan and declined to 52.42 British pence from 52.60 pence. It fell to 59.56 euro cents from 59.70 cents and dropped to 78.58 yen from 78.97 yen. It traded at 90.29 Australian cents from 90.16 cents yesterday.


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