NZ dollar rises on higher Fonterra forecast payout
Monday November 9, 05:02 PM
* Kiwi rises on forecast higher dairy payout
* Kiwi recoups some losses against the Aussie
* Swap rates higher, bonds lower
WELLINGTON, Nov 9 (Reuters) - The New Zealand dollar NZD= rose on Monday after dairy giant Fonterra, which generates about 7 percent of New Zealand's gross domestic product, lifted its forecast payout to farmer shareholders by almost 20 percent.
The kiwi settled around $0.7348/58, after surging to $0.7363, its highest since Oct 29, from about $0.7255 in late Friday trade.
"The Fonterra news should have momentum and support the New Zealand dollar for another day or two," said Westpac senior strategist Imre Speizer.
Fonterra raised its forecast payout to NZ$6.05 per kg/milksolids from a previous NZ$5.10, citing an increase in international dairy prices. [ID:nWEL402547] Analysts said the increase payout will mean an extra NZ$1.3 billion for ($944 million) NZ dairy farmers.
House prices data also supported the kiwi. Quotable Value showed house prices grew in value for the first time in 16 months in October, with the recovery driven by a lack of houses for sale. [ID:nWEL18421]
The kiwi also benefited from a weak U.S. dollar after a meeting of the Group of 20 finance officials failed to take action to rebalance global flows or talk more specifically about the U.S. dollar's recent decline [ID:nLQ516726].
The kiwi, which has come under pressure over the past weeks because of the prospects of rising rates in Australia, recouped some losses against the Aussie, but remained below the A$0.80 level.
This week sees the Reserve Bank of New Zealand's six-monthly report on the financial system, as well as third-quarter retail sales [NZ/POLL] and October month house sales and prices.
The data will be watched for more evidence that the emergence from recession seen in the second quarter has picked up pace, and whether that might bring forward the RBNZ's tightening cycle.
Swap rates NZDIRS rose after the Fonterra news, while New Zealand government debt prices weakened on less demand for safe-haven bonds. The benchmark 10-year bond NZ10YT=RR yield closed 5 basis points higher at 5.79 percent. (Reporting by Mantik Kusjanto; Editing by Jonathan Standing)