Summary:

• Global Dairy trade auction shows decline of 1.0%
• Second consecutive decline for the Milk benchmark
• NZDUSD lower by half a percent on the day

The most recent result of the global dairy trade (GDT) auction has shown a decline of 1.0% for the price index – the second drop in a row. Whilst the scale of the decline isn’t a major concern it does add to the loss seen last time out and the run of 3 consecutive gains seen beforehand have now been erased and some. 

 The fortnightly GDT auction has shown another drop. Source: globaldairytrade.info

The New Zealand dollar has been an interesting currency to follow lately with contrasting forces acting on the Kiwi. The inconclusive result of last month’s election has substantially raised the level of political uncertainty in the country and this remains a potential source of weakness going forward.

On the other hand, last night saw a better than expected inflation reading with the CPI Q/Q rising by 0.5% vs 0.4% exp and 0.0% prior. This equates to a y/y reading of +1.9% and this brings the metric back close to the 2% inflation target. 

Let’s now turn our attention to the markets and the NZDUSD. The market enjoyed a steady gain last week with the pair rising from its lowest level in 4 months at 0.7055. However, today’s declines could mark an end to the recovery with a bearish engulfing candlestick forming on D1. Monday’s high of 0.7205 could now be viewed as a resistance level to keep an eye on and as long as price remains below here then further declines could lie in store.

 

 The NZDUSD has rejected prior resistance at 0.7205 and could now be set for further declines. Source: xStation