AUDNZD - Five Year Lows

[winner69]

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)

[lemonski]

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.

[dingoNZ]

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.

I've tended to notice that the dairy prices are more of a 'lead' and ht economy tends to catch up 4-6 months after said events occur. Just from my historic observation

[stoploss]

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 .

[dingoNZ]

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.

[dingoNZ]

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.

[Xerof]

I can smell Parity on your breath Winner

[winner69]

I can smell Parity on your breath Winner

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)

[Wolf]

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 the RBA cuts rate's next week shouldn't it lead to the NZD increasing against the AUD?
As lower interest rates cause a depreciation in the exchange rate.

[Xerof]

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