We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Mixed
GBP/USD
Bearish
USD/JPY
Bullish
Gold
Bullish
Oil - US Crude
Mixed
Bitcoin
Bearish
More View more
Notice

DailyFX PLUS Content Now Available Freely to all DailyFX Users

Real Time News
  • What are the key facts one must take into consideration in the earning season and why is it important for the #stock market outlook? Find out from @JMcQueenFX here: https://t.co/tzAa2WClpv https://t.co/OMw9Xj5hOv
  • LIVE IN 30 MIN: In this session, Currency Analyst @ZabelinDimitri will preview the upcoming week's main political themes and discuss their impact on financial markets https://www.dailyfx.com/webinars/146770987?utm_source=Twitter&utm_medium=DFXGeneric&utm_campaign=twr
  • Commodities Update: As of 02:00, these are your best and worst performers based on the London trading schedule: Silver: 1.60% Oil - US Crude: 0.79% Gold: 0.13% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/f6xT4Uo2tO
  • Forex Update: As of 02:00, these are your best and worst performers based on the London trading schedule: 🇳🇿NZD: 0.20% 🇦🇺AUD: 0.13% 🇬🇧GBP: 0.08% 🇨🇭CHF: -0.03% 🇨🇦CAD: -0.05% 🇯🇵JPY: -0.13% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/co2JkXN1A9
  • LIVE NOW: Join DailyFX Senior Strategist @IlyaSpivak LIVE as he discusses the outlook for the financial markets in the week ahead! https://www.dailyfx.com/webinars/889679267?utm_source=Twitter&utm_medium=DFXGeneric&utm_campaign=twr
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 98.08%, while traders in France 40 are at opposite extremes with 89.09%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/spZkZaPsuM
  • AUD/USD Technical Analysis: September Floor Back Under Fire - https://www.dailyfx.com/forex/technical/home/analysis/aud-usd/2019/09/23/AUDUSD-Technical-Analysis-September-Floor-Back-Under-Fire.html?utm_source=Twitter&utm_medium=Spivak&utm_campaign=twr #AUDUSD #technicalanalysis
  • LIVE IN 30 MIN: Join DailyFX Senior Strategist @IlyaSpivak LIVE as he discusses the outlook for the financial markets in the week ahead! https://www.dailyfx.com/webinars/889679267?utm_source=Twitter&utm_medium=DFXGeneric&utm_campaign=twr
  • $AUD watchers should keep a close eye on iron ore prices. They fell sharply last month, albeit from very high levels. Get your market update from @DavidCottleFX here: https://t.co/pEY7SReQ7R https://t.co/da6P4i4qBL
  • Tune in to @IlyaSpivak 's #webinar at 10:00 PM ET/2:00 AM GMT for insight on the cross market weekly outlook. Register here: https://t.co/E213bTtq5C https://t.co/QEgLPbz9Xp
Fonterra Milk Auction To Put Spotlight on RBNZ’s Next Move

Fonterra Milk Auction To Put Spotlight on RBNZ’s Next Move

2015-11-14 00:30:00
Tyler Yell, CMT, Currency Strategist
Share:
Fonterra Milk Auction To Put Spotlight on RBNZ’s Next MoveFonterra Milk Auction To Put Spotlight on RBNZ’s Next Move

Fundamental Forecast for the Kiwi:Bearish

  • New Zealand Dollar Ends The Week Nearly Flat Against a Mixed USD
  • Speculative Longs Outweigh Shorts By 20% Vs Previous 18% Showing Speculative Positioning Is Still Convincingly Long-Kiwi, Increasing the Risk if USD Moves Higher in Near-Future
  • For up-to-date and real-time analysis on the Kiwi and market reactions to economic factors currently ‘in the air,’DailyFX on Demandcan help.

Halfway through the month of November, the New Zealand Dollar has retraced much of its October gains. In fact, across the G10, NZD is lower vs. the USD than even the Oil-driven Canadian Dollar and Norwegian Krone. Month-to-date, the New Zealand Dollar is lower by 3.70%. However, the Australian Dollar is the most resilient vs. the USD due to a mid-week AU employment report that moved AU rates substantially. That type of divergence rarely lasts meaning either the NZD will soon strengthen or the AUD weaken vs. the USD. Many investment bank research notes favor the later as a likely December Federal Reserve liftoff looms.

The main domestic data this week came in the form of the Financial Stability Report, which was followed by a Wheeler conference that reinforced the view that RBNZ is on hold for the time being. A holding RBNZ and consistently weak milk auctions continue to put downward pressure on the NZD. Another milk auction next week will be looked to either reverse the trend or confirm the dropping demand for premium milk products. Another underwhelming auction could further encourage traders to sell the NZD as the milk industry’s troubles could influence the RBNZ to move forward with another cut down the road. The dairy industry accounts for roughly 25% of GDP for New Zealand, so the demand and direction of the dairy industry are worth watching if you hold exposure on NZD.

Focus next week will be on Tuesday’s Reserve Bank of New Zealand 2-Year Inflation Expectation, which will be judged vs. the prior reading of 1.94%. Lastly, the trend in other commodities has driven commodity currencies lower (save AUD though that could change), as the post-August bounce in many commodities like Crude, Copper, Gold, Iron Ore, and Milk have failed to retain buyers. If this story picks up steam and markets continue to sell commodities, NZD would likely feel the pinch as well and continue to move lower as it has through November vs. the USD. The Commitment of Traders (CoT) report showed that speculative NZD longs recently outweighed shorts by 20% vs. previous 18%. This positioning data shows that speculative positioning, which is notoriously fickle, is still convincingly long-kiwi, and that increases the risk of a sell-off if USD moves higher in near-future. T.Y.

Sign Up For a Practice Account and Receive Your Free Trading Guides Here.

provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.