The New Zealand dollar was little changed, paring its overnight gains after prices rose less than expected in the latest GlobalDairyTrade auction.
The kiwi rose to 73.18 US cents as at 8am in Wellington, having reached as high as 73.58 cents ahead of the auction, from 73.23 cents late yesterday. The trade-weighted index followed a similar pattern and was recently at 78.05 from 78.09 yesterday.
The GDT price index rose 1.7 percent to US$2,975, much less than the 5-to-10 per cent gain anticipated by futures traders, while whole milk powder actually fell 0.2 per cent to US$2,782 a tonne, snapping four successive gains.
The latest auction wasn't enough to deter Fonterra Cooperative Group from announcing a 50 cent increase in its forecast 2016/17 farmgate milk price to $5.25 per kilogram of milk solids, taking the total projected payout to $5.75-to-$5.85 before retentions. It said global milk supply was reducing while demand remained steady, although a high kiwi dollar was offsetting some of the benefits of GDT auction price gains.
"The NZD/USD pushed higher last evening, poking its nose toward 0.7360. However, the GDT auction in the early hours of this morning curtailed the move," said Kymberly Martin, senior market strategist at Bank of New Zealand.
She said the market is now awaiting the outcome of the Bank of Japan's policy meeting, followed by the results of the Federal Open Market Committee's two-day session tomorrow and the Reserve Bank of New Zealand's latest interest rate review.
Martin said the Fed may keep alive the prospects of a rate hike in December while the RBNZ may meet the market's expectation "for no cut this week, but leave open the option for a cut in November".
Also out tomorrow is Fonterra's annual results, although the revised forecast announced today was a key part of the news.
The kiwi fell to 96.73 Australian cents from 96.99 cents yesterday and slipped to 4.8771 yuan from 4.8834 yuan. It was little changed at 65.58 euro cents from 65.32 cents and rose to 56.31 British pence from 56.15 pence. The kiwi fell to 74.40 yen from 74.55 yen.