Fonterra product recall
During the weekend, news of a Fonterra milk product recall affecting China and four other countries affected New Zealand markets.
Market reaction so far has been clearly negative. The NZD/USD exchange rate fell hard on Monday morning, 0.7693, although it is recovering as we write to 0.7759. The New Zealand dollar has also fallen against the Australian dollar. NZ interest rate reactions have been modest so far. The NZ 2yr and 10yr swap
rates have risen 2bp on the Fonterra news. The 10yr swap
spread (swap-NZGB) has decreased by 1.5bp.
Read the full report: Market Research
Westpac