The New Zealand dollar tumbled to a two-month low on Wednesday after the latest dairy auction showed milk prices had suffered heavy losses, raising doubts about a recovery in the country's No 1 goods export. The New Zealand dollar fell for a sixth straight session to as low as $0.6952, a level not seen since January 9. It was last up 0.2 percent at $0.6965.
The kiwi has lost more than 4.5 percent of its value since early February. That is in part due to a resurgent greenback, which has soared on expectations of an interest rate hike in the United States as early as next week. A dovish Reserve Bank of New Zealand (RBNZ), which has repeatedly signalled it will hold interest rates at a record low 1.75 percent for a couple of years, has also weighed on the currency. Wednesday's fortnightly auction showed average prices fell 6.3 percent at the Global Dairy Trade (GDT) auction, with whole milk powder, a major export, plummeting 12.4 percent. Elsewhere, the Australia dollar jumped to a 10-month high against its New Zealand cousin, breaking important chart resistance levels.
Against the US dollar, the Aussie inched higher although it stayed trapped in a tight band of $0.7571/7633. It was last up 0.2 percent at $0.7600. The Aussie dipped briefly after China trade figures left dealers puzzled. Yuan-denominated exports rose 4 percent but imports surged 44.7 percent, leaving traders wondering what the underlying picture was.
New Zealand government bonds eased, sending yields two basis points higher at the long end of the curve. Australian government bond futures slipped, with the three-year bond contract and the 10-year contract down four ticks at 97.89 and 97.1100 respectively.