The New Zealand dollar continued to be strong against the other major currencies in the Asian session on Tuesday after the nation’s Finance Minister Bill English said dairy prices may recover at the end of this year.
Bill English said that there would be a recovery in dairy prices some time in 2015. “I don’t think there’s much doubt that they’re going to pick up, it’s just a matter of when and how fast,” he added.
Last week, Fonterra’s GlobalDairyTrade price index dropped 10.7 percent.
Bill English said a perfect storm of excess milk supply involving Russia, Europe and China, and in New Zealand and Australia led to falling dairy prices.
Another factor is there’s dairy stockpiles in warehouses of China than previously thought, English revealed.
The Reserve Bank of New Zealand is almost certain to cut interest rates in Thursday’s meeting to prop up the country’s ailing dairy sector. Economists expect a rate cut of 25 bps to 3.00 percent, down from 3.25 percent at present. Some expect an aggressive interest rate cut of 50 basis points of 2.75 percent.
In other economic news, data from the Reserve Bank of New Zealand showed that the total credit card spending in New Zealand rose a seasonally adjusted 0.3 percent month-on-month in June, much slower than May’s 1.8 percent climb. On a yearly basis, credit card spending increased at a slower pace of 6.5 percent in June following a 7.2 percent hike in the preceding month.
Meanwhile, New Zealand’s benchmark NZSE 50 index is also currently up 0.25 percent or 14.49 points at 5,876.
In Greece, the country cleared its first hurdle in the bailout crisis by repaying the money due to the International Monetary Fund and the European Central Bank with the European Commission’s EUR 7.16 billion bridge-loan, and banks in the crisis struck country opened partially despite stock exchange closure.
Monday, the NZ dollar rose against its major rivals, following comments from Prime Minister John Key that the Kiwi has fallen faster than expected. The NZ dollar rose 0.67 percent against the U.S. dollar, 0.75 percent against the yen, 1.88 percent against the euro and 0.79 percent against the Australian dollar.
In the Asian trading today, the NZ dollar rose to 6-day highs of 0.6605 against the U.S. dollar and 82.12 against the yen, from yesterday’s closing quotes of 0.6556 and 81.49, respectively. If the kiwi extends its uptrend, it is likely to find resistance around 0.68 against the greenback and 85.00 against the yen.
Against the euro and the Australian dollar, the kiwi advanced to 6-day highs of 1.6385 and 1.1155 from yesterday’s closing quotes of 1.6469 and 1.1206, respectively. The kiwi may test resistance around 1.60 against the euro and 1.06 against the aussie.
Looking ahead,U.K. public sector finance data for June is slated for release in the European session.
In the New York session, Bank of England Governor Mark Carney is expected to speaks at the Policy Exchange Summer Reception in London.
The material has been provided by InstaForex Company – www.instaforex.com