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3 Dec 2014
NZD/USD pressing against 0.7770 support
FXStreet (Bali) - NZD/USD is looking vulnerable to further falls, with the Kiwi no longer performing in the solid fashion seen in recent weeks, as further declines in Fonterra's dairy prices and a big miss in Aus GDP weigh.
ANZ Economists, referring to the latest dairy price falls, said: "The real issue for the dairy sector and New Zealand economy is not the 2014/15 payout, its prospects for 2015/16. One year of a low payout is manageable; two years becomes problematic. Putting on our rose tinted glasses, some firming in back-end contracts is welcome and 40% of the product mix does seem to be basing / lifting, but they need to lift a long way yet for any degree of comfort to be forthcoming over where the coming seasons payout could be."
Technically, the exchange rate is now pressing against key support zone at 0.7770, with a break lower exposing 0.7720/30, another strong support as per the sequence of rejections seen since late September. On the upside, sellers remain in control near term as long as 0.7810 is defended, with further offers expected around 0.7830 up to 0.7850.
ANZ Economists, referring to the latest dairy price falls, said: "The real issue for the dairy sector and New Zealand economy is not the 2014/15 payout, its prospects for 2015/16. One year of a low payout is manageable; two years becomes problematic. Putting on our rose tinted glasses, some firming in back-end contracts is welcome and 40% of the product mix does seem to be basing / lifting, but they need to lift a long way yet for any degree of comfort to be forthcoming over where the coming seasons payout could be."
Technically, the exchange rate is now pressing against key support zone at 0.7770, with a break lower exposing 0.7720/30, another strong support as per the sequence of rejections seen since late September. On the upside, sellers remain in control near term as long as 0.7810 is defended, with further offers expected around 0.7830 up to 0.7850.