NZ dollar touches new 2-month low ahead of Fonterra forecast

NZ dollar touches fresh two-month low as Fonterra payout forecast awaited

By Tina Morrison

May 28 (BusinessDesk) - The New Zealand dollar touched a fresh two-month low ahead of an expected announcement from Fonterra Cooperative Group today on a forecast payout to farmers for the upcoming season.

The kiwi touched 72.08 US cents and was trading at 72.43 cents at 8am in Wellington, from 72.51 cents at 5pm yesterday. The trade-weighted index slipped to 75.82 from 75.88 yesterday.

Fonterra is expected to announce its milk price for the upcoming 2015/16 season following yesterday's board meeting. Last month, the dairy exporter cut its forecast payout to farmers for the 2014/15 season to $4.50 per kilogram of milk solids from $4.70/kgMS after whole milk powder prices failed to strengthen as expected, and analysts have pulled back their expectations for the coming season's payout. Dairy products are the nation's largest commodity export.

"Fonterra’s opening forecast for 2015/16 remains the focus (expected this morning) with markets primed for negative news," ANZ Bank New Zealand agri economist Con Williams and senior FX strategist Sam Tuck said in a note. "The market is prepared for the announcement, implying the threshold for surprise is high."

ANZ expects the kiwi to trade between 71.60 US cents and 73.80 cents today.

This afternoon, the Reserve Bank publishes its foreign exchange transaction data, which shows whether it has intervened in the currency market.

In Australia today, the focus will be on capital expenditure data for the first quarter and intentions for the coming year, published at 1:30pm.

The New Zealand dollar advanced to 93.65 Australian cents from 93.53 cents yesterday, gained to 47.18 British pence from 47.06 pence, rose to 89.57 yen from 89.25 yen and slipped to 66.43 euro cents from 66.58 cents.

(BusinessDesk)

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