Summary:

• GDT auction results show first decline in 3 months
• NZD is sensitive to the price of milk as it is its largest export
• The decline could derail the rally with NZDUSD only recently breaking above a key trendline

The latest results from the Global Dairy Trade auction have seen a decline in the benchmark for milk price for the first time since early March. Whilst the decline was only 0.8% it does suggest that the strong increases seen in April and May have now given way with the New Zealand dollar making impressive gains lately the decline could threaten the rally. 

 Milk prices declined today at the GDT fortnightly auction for the first time since early March.

From a longer term perspective the NZDUSD has been in a consolidatory phase in recent session after breaking above a falling trendline last week. A falling wedge had been forming since last summer and the move out to the upside could be seen to signal an end to the range and mark the beginning of an uptrend. However a break above the 2017 high at 0.7375 would be needed for further confirmation that the market is in an uptrend. Alternatively a break back below 0.7200 would see price return underneath the falling trendline and would mean that this move higher was a false breakout.  

 

 The NZDUSD broke out of a long term consolidation pattern last week but the failure to continue higher could see this being a false break