The NZD/USD trades a little higher this morning, around0.8780. The NZD was fairly directionless over the course of the dayyesterday. It pushed higher in the early hours of thismorning, despite a 5% fall in average milk prices at theGlobal Dairy Trade auction overnight. This is consistentwith the downward trend in dairy prices we expect. Priceshave now fallen 29% since February. This will be negativefor dairy farmer payout calculations and with time thedeclines in prices will make a dent in NZ’s terms of tradeand current account figures. The RBNZ will be watchingclosely the divergence between falling dairy prices and stillelevated NZD.
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