Milk Prices Jump 3.8%, Approaching 2015 Levels
Investors are likely to act in the New Zealand Dollar’s favour in the coming day as data from the latest dairy auction was recently released.
After a 2.1% increase at the beginning of April, prices were hiked by an additional 3.8% on Tuesday, bringing the average price to $2,263 – the largest price hike since October 2015.
The Pound remained strong and GBP/NZD trended narrowly towards the end of Tuesday’s session, but investors are likely to react more hawkishly when New Zealand’s Wednesday session begins.
Earlier…
- ‘Brexit’ Drive Volatile Pound – Sterling fluctuates against risky ‘Kiwi’
- OPEC Oil Blows Softened – Kuwait workers’ strike improves oil prices
- New Zealand CPI Optimistic – Key indicator of inflation impresses investors
- Forecast: Latest Dairy Auction Report Imminent – New Zealand’s commodity in focus
The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate has fluctuated significantly since the week began, briefly dipping on Tuesday morning before investors settled ahead of the latest dairy auction report.
GBP/NZD has actually fallen around -80 pips since markets opened this week despite oil news severely hurting risk sentiment. At the time of writing, the pair was down around -0.2% on Tuesday’s opening levels and in the region of 2.0420.
Pound (GBP) Fluctuates on Continued ‘Brexit’ Rows, Lack of Data
The Pound slumped coming into the new week as the UK Treasury came to the forefront of ‘Brexit’ rows two months ahead of the EU referendum.
A report released by the treasury during Monday’s session offered a series of potential financial outcomes of Britain leaving the EU in June. It includes claims that the average household could be £4,300 worse-off each year and that NHS funding could be cut by a third.
Sterling was also unsupported by the lack of UK data published so far this week, with only a house price report released by Rightmove on Monday. April’s house price score of 7.3% was largely ignored by investors however amid the latest ‘Brexit’ concerns.
Fortunately, pressure on the already ‘Brexit’-weathered Pound was softened as bets that voters may choose to ‘Remain’ increased following the report. A new phone poll published by The Telegraph indicated a stronger turnout for the ‘Remain’ campaign, restoring investor hopes slightly.
‘The gap in motivation to turnout and vote between the two sides is closing. The latest ORB poll shows those who want the UK to remain in the EU are becoming more motivated to vote. This research shows that turnout overall is up three points (to 67 per cent).
This turnout jump is completely down to an increase in motivation among Remain voters – where 65% (up four points since the previous track) are now likely to cast a vote. Contrastingly, there has been no change in motivation among Leave voters, with 70 per cent saying that they are definite to vote on referendum day.’
New Zealand Dollar (NZD) Investors Optimistic Despite Oil Price Setbacks
The ‘Kiwi’ has been testing its mettle this week and managed to appreciate against some rivals despite bearish commodity bloc news holding it back.
Sunday’s OPEC summit in Doha saw members and non-members failing to agree to an oil production cap. As oil supply has been outstripping demand for some time, prices have plummeted, with commodity-correlated currencies like the New Zealand Dollar also facing the brunt of oil pessimism.
However, damage to oil sentiment was considerably lightened as prices recovered due to an oil workers’ strike in Kuwait, curbing production.
Kuwait’s oil output dropped a whopping 60% and, while unrelated to OPEC’s production talks, subsequently improved oil prices and commodity bloc sentiment. Workers have been protesting cuts to their pay and benefits, according to Bloomberg.
The New Zealand Dollar also benefitted from a positive domestic Consumer Price Index (CPI) released as markets opened this week.
In Q1, the headline year-on-year figure scored at the forecast 0.4%, improving from the previous figure of 0.1%. The quarter-on-quarter release, on the other hand, surprised investors by coming in at 0.2%, beating out forecasts of 0.1% and the previous quarter’s contraction of -0.5%.
GBP/NZD Exchange Rate Forecast: Investors Prepare for Dairy Auction
The Pound is likely to remain at the mercy of the New Zealand Dollar during Tuesday’s session as investors gear up for this afternoon’s highly anticipated dairy auction.
The price of New Zealand’s most lucrative commodity has been struggling, but experienced its largest increase since December at the April 5th event.
Another increase would indicate that the milk price situation is improving, lending the New Zealand Dollar support in the process. A decrease would allow the Pound to advance.
British data remains silent until tomorrow’s session, when a slew of employment figures are due for release. While many key prints such as unemployment and claimant count rates are currently forecast to remain the same, changes in this will certainly give the Pound some direction.
The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate currently trends around 2.0420 while the New Zealand Dollar to Pound Sterling (NZD/GBP) exchange rate trends in the region of 0.4895.
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