New Zealand dollar holds above US$0.62   

Daily Currency Update

The New Zealand dollar is slightly weaker this morning when valued against the Greenback, currently trading at 0.6208 at time of writing. The NZD/USD pair continues its downward trend declining for the third consecutive session. This ongoing sell-off in the New Zealand dollar is driven by market expectations of an upcoming interest rate cut by the Reserve Bank of New Zealand (RBNZ). New Zealand's borrowing costs are currently at 5.25% per annum, with widespread anticipation of a 50-basis point reduction at the next RBNZ meeting. There is a risk the market may be reversing and further downside could follow. This would particularly be the case if prices closed substantially below the 0.6220 support level, perhaps at 0.6200 or lower. On the local front yesterday, the ANZ World Commodity Price Index increased 1.8% m/m in September as stronger prices were recorded for all major sectors, excluding forestry. In New Zealand dollar terms, the index fell 0.2% m/m as the NZD Trade Weighted Index lifted 1.0%. On a global basis, dairy prices were up 2.3% on increasing demand, with whole milk powder increasing 24% and butter prices rising 42%. Meat and fibre prices were up 1.4% for the month and 18.3% for the year. Lamb strengthened 5% but prices are still weak, while beef returns are stronger though prices softened in September.