FXStreet (Delhi) – Sean Callow, Research Analyst at Westpac, notes that NZD/USD was under pressure in line with AUD in NY but bounced about 40 pips to 0.6280 as Fonterra announced an increase in its farm gate milk price forecast for the 2015/16 season to NZD4.60/kg of milk solids – up from their earlier estimate of NZD3.85.
Key Quotes
“However they have also revised down their forecasts for milk production, which is now expected to be down by more than 5% on last season. Our NZ economists’ forecast for the 2015/16 milk price is NZD4.30, but with global dairy prices up nearly 50% from their recent lows, the risks to this clearly lie to the upside (we will formally review our forecast after next week’s dairy auction). This is a key reason why we expect the RBNZ will decide to keep the OCR on hold at its October meeting before resuming cuts in December.”
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