Summary:
- GDT index rises 0.9%
- Largest increase since May
- NZD rising across the board; election this weekend
The fortnightly global dairy trade (GDT) auction has shown the largest increase in what is widely seen as a global benchmark for milk prices since the middle of May. A rise of 0.9% comes after a 0.3% rise seen last time out and seems to signal an end to the summer drop in prices which culminated with a sizable decline at the start of August.
The GDT price index rose by the most since May, possibly signalling an end to the weakness seen over the summer months. Source: Globaldairytrade.info
Due to the relatively large percentage of its exports that are related to dairy, the New Zealand dollar is the most sensitive currency to this release.
The NZD is rising across the board today, with the largest rise seen against the USD. Source: xStation
Whilst the Kiwi was already higher on the day ahead of the announcement, it has received another boost higher since the data was released and the NZDUSD is now approaching a potentially important resistance level around 0.7340.
The NZDUSD is back at a potentially key resistance level following the release. Source: xStation
Most traders will be aware of tomorrow’s Fed decision and the impact it could have on the USD side of this pair but the impact of this weekend’s elections in New Zealand shouldn’t be underestimated. What had been seen as a foregone conclusion has now become a race that is too close to call, and should the opposition labour party win the most seats then there could be a swoon seen in the NZD.