Summary:
- GDT auction results show large drop of 3.5%
- 3rd consecutive decline for the benchmark
- NZD under pressure after the release
The fortnightly Global Dairy Trade (GDT) auction has seen a large drop in the main price index in what could be a worrying development for the New Zealand dollar. A reading of -3.5% is the largest decline seen for several months and with the two prior readings also showing drops there is a fairly clear downtrend developing in milk prices.
The GDT price index fell sharply in declining by 3.5%. Source: globaldairytrade.info
The NZD is falling lower against most of its peers today with only CAD dropping more. Source: xStation
The New Zealand dollar is sensitive to the price of milk as it is the country’s largest export and therefore large moves in the price of milk can impact the currency. With the GDT auction the most widely followed international benchmark today’s decline could be seen to put downward pressure on the Kiwi.
The NZDUSD has come under pressure following the release. 0.6820 remains a potentially key level to watch going forward. Source: xStation
The NZDUSD has been attempting to recover in the past week or so after the major support zone around 0.6820 held firm. This rise could now be seen to be under threat however and should there be a retest of this level going forward the outcome could well prove decisive going forward. If buyers can defend this level once more then a further recovery above 0.70 could occur but a break below 0.6820 would pave the way for further declines.