The New Zealand dollar eased against the US dollar today ahead of what may be a larger-than-expected fall in dairy prices this week and continued to wane against the euro as positive news out of Germany overshadowed any uncertainty around the Italian election.
The kiwi was trading at US72.22c at 5pm from US72.39c at 8am and US72.34c in New York on Friday. It traded at 58.60 euro cents versus 58.67 euro at 8am and 59.20 cents in Asia at the end of last week.
Milk price futures are pointing to a dip in this week's GlobalDairyTrade auction, timed for overnight Tuesday. The auction result tends to push the Kiwi dollar around as dairy exports still represent around 20-to-25 per cent of total exports. Martin Rudings, senior dealer at OMF, said milk price futures point to a 2 or 3 per cent decline and the risk is that prices could fall further, which will weigh on the New Zealand dollar.
The kiwi also continued to lose ground against the euro after German Chancellor Angela Merkel announced a coalition between her conservative party and the Social Democrats, ending months of talks.
Rudings said the euro largely overlooked election uncertainty in Italy. According to Reuters, if early projections are confirmed, none of Italy's three main blocs or groups will be able to rule alone. However, previous elections in Italy have seen wild swings as the count proceeds.
