The New Zealand dollar was little changed in local trading ahead of the GlobalDairyTrade auction, which is expected to show the rebound in dairy prices has run out of steam for now.
The kiwi traded at 68.05 US cents at 5pm in Wellington from 67.98 cents at 8am and 67.97 cents yesterday. The trade-weighted index increased to 72.95 from 72.72 yesterday.
Fonterra Cooperative Group's GDT auction will be held in the US on Tuesday, with milk price futures predicting little movement in dairy prices after gains in the last four events. The recent rally in dairy prices helped allay fears about New Zealand's economy, after a slump in prices through most of the year forced milk exporters to slash their payouts to farmers, crimping their incomes for the current season and weighing on the outlook for the rural sector.
"The kiwi dollar is still becalmed after the rises of last week, weighing up before the GDT auction tonight," said Stuart Ive, senior dealer, foreign exchange at OMF in Wellington. "If we see the price come in around flat, that may take some of the upward momentum away from the kiwi."
The auction comes as traders await interest rate decisions by the US Federal Reserve and Reserve Bank of New Zealand next week. Neither central bank is expected to move, although they are in different cycles, with the Fed having indicated it plans to start raising rates, while the RBNZ says it's still in an easing cycle.
