The New Zealand dollar extended its losses against the other major currencies in the Asian session on Thursday, as weakness triggered by a decline in dairy prices was accentuated by data that showed that consumer prices in New Zealand rose less than expected in in the three months ending June 30.
Speculation rose on the probability of the Reserve Bank of New Zealand raising rates again this year, on the back of tamer than expected CPI data.
Data from Statistics New Zealand showed that New Zealand’s consumer prices rose 0.4 percent in the three months ending June 30. That was smaller than the 0.5 percent increase expected by economists and the the 0.3 percent contraction in the first quarter.
Consumer prices were up 0.3 percent on year in the second quarter of 2015. That was in line with expectations and up from the 0.1 percent increase in the three months prior.
The currency was down in the New York session after dairy products prices, the country’s key commodity export, dropped more than expected in the GlobalDairyTrade auction overnight.
In the Fonterra’s GlobalDairyTrade auction overnight, the trade-weighted index slump to 70.01 from 70.88.
Dairy product prices dropped an average 10.7 per cent to a six-year low in Thursday morning’s GDT auction, with the key whole milk powder price dropping 13.1 per cent to $US1,848 a tonne.
In other economic news, data from Business NZ showed that the manufacturing sector in New Zealand expanded at an accelerated pace in June, with a Performance of Manufacturing Index score of 55.2. That was up from the upwardly revised 52.0 in May, and it moved further above the boom-or-bust line of 50 that separates expansion from contraction.
Traders were also digesting remarks by Federal Reserve Chair Janet Yellen, who testified before the House Financial Services Committee. The testimony signaled a rate hike before the year is out.
In Greece, the Hellenic parliament has approved the tough austerity measures required by the European Union, paving the way for Athens to receive the much-needed bailout loans of EUR 86 billion. The ECB’s Governing Council meets in Frankfurt later on Thursday, while Germany’s Parliament will reconvene to vote Friday on whether to start bailout negotiations.
Wednesday, the NZ dollar fell 1.74 percent against the U.S. dollar, 0.25 percent against the yen, 1.35 percent against the euro and percent 0.52 against the aussie.
In the Asian trading today, the NZ dollar fell to a 6-year low of 0.6533 against the U.S. dollar and nearly a 1-1/2-year low of 1.6710 against the euro, from yesterday’s closing quotes of 0.6589 and 1.6605, respectively. If the kiwi extends its downtrend, it is likely to find support around 0.64 against the greenback and 1.68 against the euro.
Against the Australian dollar and the yen, the kiwi dropped to nearly a 2-week low of 1.1259 and a 1-week low of 80.89 from yesterday’s closing quotes of 1.1191 and 81.53, respectively. The kiwi may test support near 1.15 against the aussie and 79.00 against the yen.
Looking ahead, Swiss retail sales for May and Eurozone trade balance for May and final CPI for June are due to be released in the European session.
The European Central bank will announce its interest rate decision at 7:45 am ET. Economists expect the bank to retain interest rates unchanged at 0.05 percent.
Following the announcement, European Central Bank President Mario Draghi will hold the customary post-meeting press conference.
In the New York session, U.S. weekly jobless claims for the week ended July 11 and U.S. NAHB housing market index for July are slated for release.
At 10:00 am ET, Yellen will testify on the Semiannual Monetary Policy Report before the Senate Banking Committee in Washington DC.
At 2:00 pm ET, Bank of England Governor Mark Carney is expected to speak at the Resolution Foundation, in Lincoln, England.
The material has been provided by InstaForex Company – www.instaforex.com