Although Johnson's victory in last week's election ensures Britain will formally leave the EU on Jan. 31, the transition period through next year will allow Britain and the EU to negotiate replacement trade and other deals reflecting its new relationship with the continent.
At the Global Dairy Trade auction early today, the price of whole milk powder, the key price for dairy giant Fonterra, slumped 6.7 per cent to US$3099 ($4723) a tonne, its lowest since September, having reached a three-year high in the previous auction.
Westpac currency strategist Imre Speizer said the price fall was much larger than the 1 per cent decline futures pricing had suggested, and a 5 per cent increase in volumes may be one possible explanation.
Chinese demand has been the main source of growth for NZ dairy products this year.
"Looking ahead, the outlook for Chinese demand for agricultural products in 2020 is somewhat clouded by last week's trade deal between the US and China, which will require China to increase agricultural purchases from the US," Speizer said.
"In addition, we expect economic growth in China to slow from 6.1 per cent in 2019 to 5.8 per cent in 2020."
Mike Shirley, a dealer at Kiwibank, said the fresh Brexit concerns had meant the kiwi was "behaving like times of old" and falling whenever the world started looking a bit more risky.
"Boris is saying, come hell or high water, the training wheels are coming off in December," Shirley said.
Johnson is planning to add a new clause to Brexit legislation to rule out any extension to the transition period beyond next December – the bill currently allows extensions by mutual agreement for up to two years.
The kiwi was trading at 95.82 Australian cents from 95.91, at 50.05 British pence from 50.07, and was unchanged at 58.90 euro cents. It was trading at 71.78 yen from 71.88 yen and at 4.5949 Chinese yuan from 4.5954.
The two-year swap rate nudged up to a bid price of 1.2200 per cent from 1.2125 yesterday while 10-year swaps rose to 1.6930 per cent from 1.6775 per cent.
