Well according to the radio this morning we did see a record high against the Aussie. My system says the low was 1.0342 & I thought we got about 10bps lower 2 nights ago? Anyway hardly moved. Have we now seen the highs? ;-)
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Well according to the radio this morning we did see a record high against the Aussie. My system says the low was 1.0342 & I thought we got about 10bps lower 2 nights ago? Anyway hardly moved. Have we now seen the highs? ;-)
Could this fruit fly thing hurt the Kiwi? I they find more, its certainly possible.
Lets hope for our grower's sake its a rogue that has been found & there aren't others that can breed.
US backing away from raising interest rates. Not sure what this means for the Aussie/Kiwi cross?
Both should strengthen you would think.
New highs last night I think.
Will we break 98c?
Yep there Superfund policy is fantastic & is a huge boost to markets with an incredible amount of funds under management to invest.
So far the ASB guy has got it right, lets see if that was indeed a top. Its pulled back a little.
I'm out of the money & almost got stopped out last night, but survived & its looking a bit better now.
Yeah you would think those tax receipts are going to decline from the dairy industry in particular.
No doubt they will sell of State Housing & make a book profit to get a surplus!
Nice move last night, finally in the money! Maybe this ASB guy was onto something! Always loved the ASB ! LOL
Yeah I can't see it either, but you never know I suppose. I would suggest they will be conservative.
I jobbed my position out yesterday at 1.0425 as I want to reset lower, so trying to do that now. ;-)
Ahh see it was released today & maintained at $4.70 as expected.
I'm back in at a better level, so will now sit tight for a bit.
Just got an update from NAB with a view that the Aussie at 78c is fairly valued.
Interesting & in comparison to the Kiwi is it under valued?
I obviously think so. ;-)
Yeah a bit odd, I heard a guy being interviewed on National Radio, maybe it was just a view.
Nice move overnight, very happy with the posi! ;-)
I can see the Kiwi at some point getting on a slippery slope & moving substantially against the Aussie.
Kiwi strengthening again on the cross. I'm accumulating AUD here, been a great trade to date. I have the feeling the RBNZ may have been intervening on the cross, but its just a guess. I can't imagine they see this kind of strength as a good thing.
As expected Aussie retail sales came in better than expected & the Aussie got a good boost & saw the cross back to 1.0350.
Happy days & took profit.
Will look again to re-enter once things quieten down.
Should have held on as missed most of the run. Doh
Was short Aussie overnight on the highs though, so that paid well in compensation. ;-)
NZD still creeping up. They say a new all time high was reached over the weekend.
That parity to AUD getting ever so closer.
Yep sure is and there's some interesting disparities opening up in the vehicle market between the two countries.
For instance some of you will have seen Hyundai heavily promoting their new Genesis luxury car which is priced here at $99,990 fully loaded with options as the importer has decided Kiwi's are too dumb to decide for themselves whether they need the extra option packs. Meanwhile over in Australia the distributor has taken a different view and the Genesis is available from $A60,000, already very well specified and there are two options packs to chose from if you really want to go ballistic..but the $60K price includes spec that makes it a very well specified vehicle by most people's standards.
Whether any Hyundai is really a true luxury car or worth $100K here is an open question in my opinion so this is just an illustration of some of the many opportunities. see www.carsales.com.au and sort more for yourself.
Great time to be topping up my ASX holdings :D
Goodness gracious well into the 98s .....essentially parity
BFG must be hurting. Where is BFG when we need him for further guidance
Westpac will now only give you NZ$1 for each AU$1 you sell them via a telegraphic transfer in a retail transaction according to their online tools
Ha ha
Probably a dumb question, but why does the market seem to be ignoring all the poor results coming out of the GlobalDairyTrade auctions? Overnight there was a 10.8 drop in global dairy prices, yet the NZD hasn't moved. Reading about the NZD and AUD reaching parity, one of the factors mentioned in the performance of the AU economy was the bottom had dropped out of iron ore prices. Yet NZ's "iron ore" doing poorly doesn't seem to have any effect.
It all depends what sort of mood traders are in mate and what story they want to get excited about this minute.
Over time as pointed out earlier on this thread there is little (even slightly negative) correlation between global dairy prices and the NZD/AUD
The driver of the cross rate over time is the relative economic performance between the countries (and interest rate differentials)
Thanks, make sense. If dairy prices are continuing to fall though, wouldn't that be putting downward pressure on the interest rate, rather than the next move upward as has been talked about? Surely the economy can't remain insulated from falling dairy prices forever.
It's all to do with the relative differential in interest rates as well.RBA more likely to cut interest rates sooner than the RBNZ ( if they do , or more likely on hold for a year ) .
Dairy prices may be falling , but major commodity prices that Australia are a big exporter of have plummeted ..... this is going to take a couple of years to work its way through the system , for inefficient miners to go out of business along with some mining service companies etc ......
Until the wipeout of these occurs the bottom won't be in and the Aussie CCY will be going nowhere ( but down ) IMO .
RBA expected to cut rates next week, should see some pressure off the AUD, we will retract a bit should they drop rates this week, but parity looms in the not too distant future.
if they decide to stay at the current level (2.25%) then I would expect some weakness in the AUD. I believe a rate cut is already factored in at current levels. With the FOB Iron Ore cost retreating one would imagine the RBA will be forced to cut rates to offset the falling commodity prices. Interesting week ahead.
I can smell Parity on your breath Winner :D
Why not 1.05 .....that be good
My view much the same as six months ago - there will be short term spikes and tumbles (the noise you see) but with an upward bias and I would not be surprised to see it over parity later in the year (I did say once hat parity might be it)
I think I once mentioned 1.10 as a target, but lets do it a step at a time......
Yes, a rate cut by RBA is probably being priced in as we speak
Dingo, you might like to read this piece. Dickens is the best independent economist in NZ. If you had access to his subscription based reports as well you would get more in depth and fascinating insights into a raft of things. This one is free.
http://www.sra.co.nz/pdf/DairyPricesAug14.pdf
If busy this extract answers your question -
The right chart above compares the annual % change in the ANZ NZD Dairy Commodity Price Index with annual GDP growth. The overall correlation is -0.09, which isn't statistically different from zero (i.e. there is no correlation between GDP growth and dairy product price inflation). If we assume it takes around a year for changes in dairy product prices to filter though to spending, which is roughly in line with the left chart above, the correlation is -0.2 (i.e. the old drip-feed theory doesn't work either).
Since 1992 there have been seven significant falls in dairy product prices including the latest fall and in only one of these was there are recession and this was when the financial crisis struck in 2008/09 and had a major negative impact on a number of things.
Interestingly, between 1992 and 2007 the correlation between dairy product price inflation and annual GDP growth was -0.45 (for info on what correlations measure and how to interpret them use the link below). The inverse relationship is evident in the right chart above. All of the five significant falls in dairy product prices prior to 2008 coincided with above average economic growth. If the economists and media took the time to review the historical experience they should be greeting the latest fall in dairy product prices with enthusiasm in terms of what it might imply for economic growth. Clearly falling dairy product prices don't drive above average economic growth, but this is one of those wonderful counterintuitive situations that economics throws up from time to time.
99.65 cents today based on trading in the overseas FX markets overnight.
Parity Party preparations pending.
Not looking forward to my next pay check :(
A couple of comments regards previous posts. Interest rate differential is a key driver & government policy is making it difficult for the RBNZ. Adding fuel to the fire of the Auckland property market certainly won't help. The dairy price weakness is yet to filter through & Winner69, the problem with historical data is that it is historical. Previous comparisons don't allow for the huge up swing in production or price such that the impact of this last boom & bust will be like no other. The NZ economy will not just shake off $6Bln plus of revenue being wiped out. How long before exporters start screaming for help? One of the issues Australia had was their ccy stayed stubbornly high long after commodities had collapsed due to QE & zero interest rates in major economies. And now look what is happening in Australia. If it wasn't for immigration the housing market would collapse as well. Seeing an similarities to NZ?
The view I posted is in regards the latter half of this year when I think we will see the impact of lower dairy on the economy. Anything can happen in the short term. For the sake of the economy we better see a lower ccy, otherwise things will get a hell of a lot worse. We are a export led economy, if the ccy doesn't cushion the blow of lower commodity prices as it has in the past due to having the highest interest rates in the Western World then watch out. This is what happened in Australia & the RBA did everything possible to drive their ccy lower and after a very stubborn delay its worked, but probably too late to avoid their economic slow down & potential recession.
Daytr, i think your comments spooked the market ......the NZD is falling this mornings......almost below 99 cents
Looks like parity may be a while off. Its interesting they are now discussing this on breakfast tv. I think the more plebs talk about it the less likely it is it may occur. BUt that aside, one thing I do not understand. Everyone (generally speaking here) is saying how bad the Australian economy is. And the mining sector is suffering yes. But my younger brother in Sydney works in commercial carpet laying and he has never been busier. Anecdotal I know but I cannot juxtapose the two without asking is it really that bad in Australia?
Not all the mining sector is stuffed many of the ASX gold miners are making record profits as i'm sure many ASX miners are as there commodity prices in AUD are giving them some major profit margins(costs down also) ,,also with the Iron ore Coal & Energy sectors under so much pressure adding to major job losses ...Oz.labour rates have fallen ..
Here in so called rockstar economy the export backbone is under major pressure... yet as building/property industry (thanks to cheap debt/ chch rebuild) is booming we are told we are far better off than Aussie(last I read we have one of the worse debt to household wealth in the western world) ..Auckland is the second most expensive city in the world to incomes to own a property ....
Bonuses it's great for import's from the likes of Aussie Cheap.. lamb beef seafood anyone ? then of course kiwis and other nations boosting Aussie tourism over the likes of NZ..
Yes ....pretty dire ... I'm really hoping later this year we have fallen but below 90c ...not really all that confident that our Gov gives a toss..while property/consumers are booming
"Mr Key acknowledged many exporters were not happy with the situation but encouraged them to continue to invest and drive productivity. New Zealand firms were doing well on the international stage, he said"
Well Mr key how do fishermen and other exporters that have 90%+ exports to Aussie drive productivity/investment if our profit margins are dropping 50-60% from 20yr averages because of the high NZD ? Its pretty simple you only have a set amount of Quota to catch by law ? you have rule of law on how and where you can fish and standard of F.V and costs ...so really just paying your workers less is the true only way to improve productivity ? maybe importing slaves from third world country ? ...
I finished converting to AUD the other day, much more opportunities on the ASX.
Short term while parity and beyond is still possible, in my opinion it will drop back down near the end of this year, and if not certainly in the long term.
Doing the same thing here when purchasing stock.. looking to Australia first... swings and roundabouts, it will go back to .85 at some stage
I would have thought we will still see parity, however the longer it takes the less likely I think it will happen. I think we will see a high between 1.03 - 1.05.
I believe NZ Dollar could stay strong against AUD in the short run. However, both NZD and AUD should depreciate against USD continuously. Particularly we may see free fall in NZD and AUD against USD towards end of this year and in 2016. DUOR.
Apart from the long term average that should pull the nz/au nearer to 0.85, can the kiwi realisticly hold parity against the ausi into the future. Is the kiwi economy that much better off than the ausi. Time will tell.
Would our dollar be so valued if we had rates as low as AUD.....I think not
Is the fact the Gov and others like to portray a High NZD/AUD as signs of a great booming economy to are peer Aussies across the ditch when in reality it's purely been driven by the worlds investors hunting for safe yield ?
The NZD/AUD is working great for the Aussie economy ..as they own so many NZ businesses their profits in AUD are soaring ..also less Aussies will travel here and more likely spend there tourism dollars at home ....
Food etc how many supermarkets will now both here and across the ditch be stocking Aussie products over more expensive NZ ones ...same for other export markets ..I remember not long ago when we were at record highs against the USD the factory we supplied with a certain fish stock lost one of it's contracts(Russia) to a lower cost supplier nation(USA) ...it pretty much happened within months ....and took much longer to find another buyer..now it's looking like our core export fish market to Aus is going the same way ....
The longer the NZD is high against the AUD the more damage it will do ..Can't believe all media rubbish about a parity party hooray ....happy days we are a rich nation BS ...we our a tiny export driven nation many thousands of miles away from many of our buyers... Aussie has been a cornerstone export market for tens of thousands of kiwi jobs...
And some how we should be Happy about it ....because Property is booming right ...we are taking the wrong path to wealth as a nation
Biggest exports to Aus by value - Crude Oil and Gold (the latter likely to drop with OGC limited life in NZ mines)third- Wine
Australia is NZ’s second largest destination (behind China) for our exports of food and beverages ...
BILATERAL TRADE BALANCE is going have a massive turn-round over the next couple of years ...IMHO on the back of the chch rebuild coming to a end ,,property blow-off in general we will also be hit with a huge trade deficit ...a perfect **** storm is coming job losses just the same we seen in Australian auto sector and mining we will get in the property/food/mining etc
Time to import bananas & pineapples ! ;-)
http://www.stuff.co.nz/taranaki-dail...nomy-world-cup
Are we winning the economy world cup?
So very true ....Many hardworking kiwis will suffer on the back of property speculation adding very high debt loads to incomes(bubble)
then we have a very open door policy to foreign people with money to become kiwis and adding even more pressure to property in major centres,,,, maybe it's time we have limits on foreigners buying in the main centres with so many towns round NZ have a glut of empty properties push more towards these areas to balance NZ out ....
IMHO we are get very out of balance in this country ... guess it bit like the fergburger down here in Queenstown pretty much 24/7 there in a line running down the street for fergburger yet you could go to Doz other Burger food outlets within a short distance and get a burger just as good but its a "human sheep motive" Wow that place is booming better go there >>>
I'll give you the Fergburger certainly isn't the same as it was 7 years ago, still bloody good though!
I agree with you on restricting foreign investment into our property market, just take a look at the data showing how much Chinese money is being put down into the Auckland market
Since the China GDP data at 14:00 we're back up too NZD/AUD = 0.9903, parity party, anyone?
People look at currency as if it were a stock and assume a strong currency is bullish and a weak currency is bearish. This may be for capital movement, but economically, it is opposite. Strong currency reduces exports and weaker currency results in more exports.
M.Armstrong.
These numbers are notoriously erratic, so although the market will pare their rate cut expectations, lets wait until we see next months & see if there are revisions or a reversal etc. You just need to look at the numbers of Kiwis returning. Net migration has dropped from around 35k p.a. to 2k p.a.
Its probably an exaggerated sample, however its a reasonable indication of the issues around employment in Aussie.
NZD actually strengthened further overnight. I would suggest we will see a surge through parity & that will be the time to jump in & buy AUD.
Not just two parties... we all piggy back off China, eur, us etc etc
And we are back up to .9949, getting o so close to that magic 1:1 mark. Just wondering if this is the highest it has ever been. I like it for the novelty factor but my Aussie holdings sure are taking a pounding. Swings and roundabouts anyway, but it should not be long till we see parity if this keeps on going.
Lets wait and see how the AUS CPI data comes out at 1.30pm today, QoQ expecting 0.1%
The vagaries of the market I see. From .9940 to .9720 in a week. So no PP this time round but maybe this year still sometime.... or not :)
Westpac Australia are saying they expect PP to be imminent, RBA rate cut in May? Anyones guess as to what happens. With Oil and Iron Ore prices rising and firming up at the tail end of the week and strong than expected CPI you'd expect that the AUD strengthened, question is, can it be sustained. Highly volatile at the moment..
Well the RBNZ has also now started jawboning down the ccy & has also mentioned they have a mild bias toward cutting rates later in the year.
Just tells me as mentioned at the time the rate hikes they made were a mistake.
And here we were 4 months ago being told by bank economists to 'lock in fixed mortgage rates before the hike'....
Seems the Aussie may be strengthening as we are now in the low .96's but versus the other currencies we are holding our own. Looks like PP may be a long way off now. Interesting for me when the main stream media start talking about these things its normally a sign that its going to turn. A bit like the old "when taxi drivers start talking about investing in shares its time to sell".
Is parity now a pipe dream? The sentiment shift that was predicted seems now to be upon us.
I think any bounce back toward parity is a sell.
I see no reason to change my outlook on the NZD:AUD being - there will be short term spikes and tumbles (the noise you see) but with an upward bias and I would not be surprised to see it over parity later in the year.
Currently starting to behave like it did last year when it tumbled down to 90 cents. We'll be right and look forward to parity still
Eyes to the RBA cash rate today @ 1630, most thinking a 25bp cut to 2.00%
Should be noted Iron Ore has rebounded nicely to back over $50/tonne in the past 10 days, not sure if will alter the RBA decision but Hockey said he believes long term it will drift to the $30's.
I don't believe we will now see parity with the AUD so close but so far....
RBA now has neutral stance on rates, RBNZ looking to perhaps cut. How quickly times change.
Yes looking at re-financing with local ANZ come back with 5.3% 6months told him to go and find a better rate ...this cut should help
deposit rates down longer term fixed down SBS was doing 4.99% 5yr rate yet shorter terms are higher load of banker rubbish ,,swap rates giving the banks even fatter profits than last few years ..
Both AUD and NZD will become brother and sister. We could see bigger fall in NZD and AUD aginast USD and Asian currencies toward end of this year and in 2016.
What is happening to our $? Under .93 vs the Aud now and also dropping against other currencies. Where are the so called experts that were talking up parity in the media now? It seems to have gone very quiet. This is a huge drop in a short space of time. But I wonder what is driving the move. Is it perceived strengthening in the Aussie economy or the potential for rate cuts here and yet another lower dairy auction?
Give it time, the RBNZ now have huge pressure to drop rates this year and this is now being factored into the NZD.
This is more strength in the AUD rather than weakness in the NZD, watch closely to Iron ore/commodity prices as they decline so will the AUD. The outlook for Australia isn't exactly rosy for the short/mid term.
I upped my ASX holdings between 0.982 and 0.996 and will monitor the dollar closely. :t_up:
Self fulfilling or just perceptive? It was pretty obvious that the NZ economy was turning six months ago. Dairy being the obvious case in point.
Dingo, well its both & in fact the NZD has dropped considerably against the USD since the RBNZ started talking down rates etc. The yield trade in the NZD is unwinding by looks. The Aussie has had a bit of a lift comparatively & I agree this maybe temporary.
That might be the snapshot right now Snapiti, but markets project forward & the market is saying the picture going forward isn't so rosy & the RBNZ might narrow that interest rate differential. When you have a yield trade in play, there is a lot of fast money that is exposed to the ccy & some of the sharp depreciation will be flow out protecting capital & trying to beat the pack. So from that perspective we may have seen the worst & may well see a settling down after a very swift 8c move against the Aussie.
.......unless Mr Wheeler is 'conned' by all this bank propaganda. They (banks) are dead set on getting lower interest rates, no doubt for their own benefit. Hope Wheeler has some spine
As I said a week or so ago OCR cuts this year will not be good in the medium and longer term.
Wheeler must be planning some different levers to cool the housing bubble surely, so that they don't have to rely on interest rates rising and destroying the last pathetic fragments of our export industry?
At least I really hope he had a plan, if not I am with you guys - seems nuts.
I'm thinking a rate cut around September, however the RBNZ will also be aware that it takes around 6 months for rate cuts to take effect so they may jump the gun early. They will be pretty happy with what their jawboning has achieved in the last few weeks in regards the ccy especially on the Aussie cross.
Retail sales booming according to Stats NZ retail Trade Survey for March
Even guru bank economists from Westpac surprised - quote 'Indeed, relative to our own expectations this was a modest upside surprise - we were primed for the drop in retail prices but the value of spending was even stronger than we had expected. One consequence could be an upgrade to our GDP forecast. '
Lower fuel prices are probably the main driver I would have thought.
Most predictions I have read is spending to slow as the Dairy price bust hits home in a few months.
Retail sales even stronger if you back fuel sales out (they were down). The extra cash consumers had might have had them buying more laptops, furniture, and meals out etc. but at th end of the highest even of spending for many years
More to the economy than dairy prices daytr - over time there is very little (if any at all) correlation between dairy prices and economic growth in nz
Comparing March quarter this yearvv March quarter last year. Actual sales and non of this seasonally adjusted stuff
Fuel sales were down $176m (impact of lower pump prices)
All other sales were up $1.108m ($1.1 billion) or 7% more than last year last year
So plenty saved on fuel but heaps more than what they saved was spent on other things.
The average quarterly increase (over prior year) in core sales has been about 4% - the 7% (close to 6% if we assume that savings from fuel was spent on treats and shouldn't be counted) in March is much stronger than that. I say really strong
Or are we arguing different things?