NZ dollar static as drought confirmed
Thursday 28 Feb 2013 9:48 a.m.
The New Zealand dollar was little changed as traders pondered the impact of drought on the dairy industry, the nation's biggest exporter.
The kiwi dollar traded at 82.57 US cents from 82.42 cents at 5pm in Wellington on Wednesday. The trade-weighted index was little changed at 75.51.
The Government on Wednesday declared a drought in Northland and hinted that other regions may follow.
Fonterra Cooperative Group kept its milk payout forecast unchanged even as global prices for dairy rise.
Meanwhile, the Dow Jones Industrial Average rose 1.2 percent to 14066.15, nearing its 2007 record.
"Some media articles around the drought and the impact on dairy are tempering the strength" of the kiwi dollar, said Alex Sinton, senior dealer at ANZ New Zealand. "It will strengthen up. We've had a reasonable cleanout."
The local currency may trade in a range of 82.25 US cents to 82.95 cents on Thursday, Sinton said. It broke through key support below 83 cents this week.
Government figures showed exports of milk powder, butter and cheese fell 16 percent to $1.1 billion in January from the same month in 2012 and were down 7.7 percent in the 12 months through January.
Fonterra chairman John Wilson said the company is "critically aware right now of the difficulties our farmers are experiencing" as extremely dry weather hits milk production and rives up feed costs.
Traders will be watching for the ANZ Business Outlook for a broader take on business confidence and also will keep Australian capital spending data on the radar, given the Australia's central bank sees investment in the resources sector near its peak.
Mr Sinton said he doesn't expect the Reserve Bank of Australia will be pushed into cutting rates though it will be "actively watching" the figures.
The kiwi dollar rose to 80.76 Australian cents from 80.61 cents. It slipped to 62.90 euro cents from 63.12 cents as the euro broadly strengthened following a successful Italian bond auction. The local currency traded at 54.50 British pence from 54.55 pence.