Dairy Auction Results Softens Pound Sterling New Zealand Dollar Forecast (GBP NZD)

March 1, 2016 - Written by Ben Hughes

STORY LINK Dairy Auction Results Softens Pound Sterling New Zealand Dollar Forecast (GBP NZD)

Diary Prices Rise - Higher Milk Prices Boost NZD Trading

Yesterday’s afternoon session brought the publication of the fortnightly GlobalDairyTrade auction results and investors holding the New Zealand Dollar (currency : NZD) sat up and took notice. The average winning price has fallen for the past four auctions, so expectations were limited for yesterday’s results. However, the small increase in the average winning price, the first rise in 11 weeks, from last month’s showing of an average USD2,235 to USD2,253 per metric tonne this time around look set to favour the Kiwi Dollar in the short term.

The New Zealand economy remains heavily dependent on the export of its plentiful dairy products, so the first price increase since before Christmas represented a strong positive. This was evidenced by movement for the Pound Sterling New Zealand Dollar exchange rate which started out yesterday’s session lodged in the 2.1200s, but sank into the 2.0900s following the publication of the GlobalDairyTrade results.

Pound Sterling to New Zealand Dollar (GBP/NZD) Exchange Rate Outlook Negative

Drilling down into the numbers, dairy analysts noted that the Whole Milk Powder (WMP) result, which NZD-holders consider to be the most important individual element in these sales due to the fact that WMP remains New Zealand’s number one export, showed a healthy uplift of 5.5% compared to the 16th February auction. The outlook for the Pound Sterling New Zealand Dollar exchange rate has therefore turned negative, with the majority of analysts forecasting increased losses for the pair as March wears on.

Oil Prices Forecast to Impact NZD to GBP, USD Exchange Rate Movement

Looking ahead, today’s session is likely to be dominated by price action for another key commodity; this afternoon’s US Crude Oil Inventories data will have a profound effect on various leading global tenders. The weekly figure provides a tell on the level of oversupply in the global market for ‘Black Gold’, with oil analysts looking for a showing of above last week’s result of 3,502,000 barrels as an indication that the oil glut is increasing and that oil prices may be heading Southwards once more. Such an outcome is forecast to propel the Pound Sterling higher against both the Norwegian Krone (currency : NOK) and the Canadian Dollar (currency : NOK).

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TAGS: Daily Currency Updates New Zealand Dollar Forecasts Pound Forecasts