The dollar dipped after prices unexpectedly fell at the latest GlobalDairyTrade auction. Photo / File
The New Zealand dollar dipped back below 70 US cents after prices unexpectedly fell at the latest GlobalDairyTrade auction, raising doubts about Fonterra Cooperative Group's forecast payout to farmers.
The kiwi traded at 69.90 US cents as at 8am in Wellington having crept up to 70.18 cents in overnight trading, to leave it little changed from 69.93 cents yesterday. The trade-weighted index was at 73.69 from 73.79 yesterday.
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The GDT price index dropped 3.9 per cent to US$2,969 at the overnight auction, with declines across all products, including New Zealand's key dairy export whole milk powder, which fell 2.5 per cent to US$2,755 a tonne.
Fonterra has already reduced its forecast payout for the current season to $6.40 per kilogram of milk solids and the latest auction is seen as putting that under pressure.
"Downside from here could be substantial if global milk supply continues to run at plus-3 per cent in the New Year. Such a pace of growth has historically coincided with a 30 per cent correction in price," ANZ Bank New Zealand rural economist Con Williams said in a note.
"Familiar ranges held overnight for the NZD/USD, but it is threatening to test lower. The weaker dairy auction has dented sentiment."
Traders will be watching a glut of data from New Zealand today, with Statistics New Zealand released September quarter balance of payments, and November travel and migration and merchandise trade reports. That comes ahead of tomorrow's third-quarter gross domestic product release, which is expected to show a slowing pace of growth.
US tax reform remains in the spotlight, with the Senate expected to pass a vote on the bill tomorrow. Wall Street dipped from new highs, with stock markets having been bolstered by the prospect of a lower corporate tax rate in the world's biggest economy.
The local currency rose to 78.98 yen from 78.76 yen yesterday and was little changed at 91.21 Australian cents from 91.27 cents. It traded at 52.23 British pence from 52.26 pence yesterday and fell to 59.01 euro cents from 59.31 cents. It slipped to 4.6165 Chinese yuan from 4.6265 yuan yesterday.
The New Zealand sharemarket reached its highest level in a month.