Currency talk: Do oil and milk mix?
Jason Walls and BNZ's Raiko Shareef discuss the global currency market news on NBR Radio and on demand on MyNBR Radio.
Global oil prices will play a significant role in dairy prices and the value of the New Zealand dollar, says BNZ’s FX strategist Raiko Shareef.
He says he expects to see double-digit growth at the GlobalDairyTrade auction tomorrow morning, which will be supported by the recent rally in oil prices.
Oil prices soared on Monday, after a downward revision of US oil output as well as a report that sparked speculation that Opec may be considering cutting production.
Despite the bounce, oil prices are still low and Mr Shareef says “we’re in for a period of very low oil prices, for an extended period of time.”
He says lower prices are good for New Zealand as an importer of oil and should support economic growth through consumption.
He says one of the biggest factors weighing on the New Zealand dollar is the US Federal Reserve’s interest rate decision this month.
NBR Reporter Jason Walls says the market has pulled back its pricing for a rate hike this month.
He says on September 4, the US jobs report will be released.
“If the numbers show unemployment is still dropping, it may give the Fed a bit of ammunition,” he says.
Mr Shareef says the New Zealand dollar will be driven by the Fed hiking rates this year.
He adds the higher oil prices mean higher inflation in the US, which will ease concerns that inflation is too low.
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NBR Radio
Tue, 01 Sep 2015
Tue, 01 Sep 2015
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Currency talk: Do oil and milk mix?
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