Summary:

• Global Dairy Trade price index drops to -2.4%
• Lowest reading in many months
• NZDUSD falls to 1-month low to test key 0.7130 level 

The most recent reading for the Global Dairy Trade (GDT) auction has shown a fairly large drop of 2.4% which ends a run of 3 successive increases. Not only is the decline itself a bad sign for milk prices, but also the size of the drop. You have to go back to May to see a bigger swing on the prior result. 

 The latest GDT price index declined sharply, ending a run of 3 consecutive increases. Source: xStation

The sharp decline is a blow in particular for the New Zealand dollar, with the Kiwi a major exporter of milk. The NZDUSD has fallen back towards its lowest level of the day following the release and price is now not far from the late-August low of 0.7130. A head and shoulders of sorts could be identified on a daily timeframe with the market now approaching the potential neckline at 0.7130. A break below this level could be seen as a major bearish development and would pave the way for a possible drop towards the 2017 low at 0.6817. 

 The NZDUSD has fallen towards a potentially key level at 0.7130. Source: xStation