The New Zealand dollar rose above 84 Australian cents and will probably kick on further after Fonterra Cooperative Group upgraded its forecast payout to farmers by more than expected, and as construction work across the Tasman tapered off.
The local currency rose to 84.39 Australian cents at 5pm in Wellington from 83.86 cents yesterday. It fell to 80.68 US cents from 80.88 cents at 8am and 80.81 cents yesterday.
Fonterra raised the 2014 forecast payout to farmer shareholders to $7 per kilogram of milk solids from $5.80 in the current season. That beat what the market was expecting, and helped bolster investor optimism the gains in dairy prices will help offset the impact of the recent drought which kept a lid on supply.
“The Fonterra forecast was much better than expected,†said Imre Speizer, market strategist at Westpac Banking Corp in Auckland. The New Zealand/Australian dollar cross-rate “should go further with new highs by tomorrow – we’re very bullish on that cross.â€
The New Zealand Institute of Economic Research, whose quarterly survey of business opinion is closely watched by the Reserve Bank, today said it expects the central bank will start hiking interest rates at the start of next year, and introduce macro-prudential tools to stymie the housing market within the next six months.
That comes ahead of a speech by Reserve Bank governor Graeme Wheeler at 9am tomorrow, and data tomorrow afternoon which will show the size of the bank’s intervention in currency markets last month.
The kiwi rose to 82.60 yen from 82.42 yen yesterday and increased to 62.77 euro cents from 62.56 cents. It gained to 53.70 British pence from 53.51 pence yesterday, and the trade-weighted index gained to 76.57 from 76.38.
