AUD/NZD Exchange Rate Fluctuates on Dairy Price Decline, AUD/EUR Softer

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One Hundred New Zealand Dollars (NZD)

The Australian Dollar to New Zealand Dollar (AUD/NZD) exchange rate moved between highs of 1.1023 and lows of 1.0981 on Wednesday as both South Pacific assets came under significant pressure.

The Australian Dollar (AUD) posted widespread declines in response to dovish comments from the Reserve Bank of Australia and Japanese political concerns while the New Zealand Dollar was feeling the heat following yet another disappointing dairy price auction.

Dairy produce is New Zealand’s biggest export and at the latest auction prices fell. The previous two auctions had shown some stabilisation of price drops so this result was disappointing.

It also took the total decline in dairy prices for the year to around 50%.

Australian Dollar and New Zealand Dollar Exchange Rates Struggle

The latest dip in prices may force Fonterra, New Zealand’s largest dairy producer, to revise its price projections. According to one forex dealer; ‘There’s plenty of people saying Fonterra will have to be revising down. If farmers are paid out less money then there’s a knock-on effect for surrounding industries.’

The AUD/NZD exchange rate could experience additional fluctuations later today as New Zealand publishes its Producer Price Inputs/Outputs reports and China’s HSBC Manufacturing PMI is published.

If the manufacturing figure declines, as it is expected to do, both the commodity driven Australian and New Zealand Dollars could fluctuate.

The Australian Dollar to New Zealand Dollar (AUD/NZD) exchange rate is currently trending in the region of 1.0981.

AUD/EUR Softer Despite Eurozone Construction Flop

Meanwhile, the Australian Dollar to Euro (AUD/EUR) exchange rate continued trending lower despite the Eurozone’s Construction Output report falling short of forecasts.

According to Eurostat; ‘The decrease of 1.8% in production in construction in the Euro area in September 2014, compared with August 2014, is due to building construction falling by 1.6% and civil engineering by 3.0%. In the EU28, the decrease of 0.9% is due to building construction falling by 0.8% and civil engineering by 1.3%’

There was some good news for the Euro today in the form of the Eurozone’s Current Account data. Both the seasonally adjusted and non-seasonally adjusted current account surpluses widened in September.

Tomorrow’s Manufacturing/Services/Composite PMI for the Eurozone and its largest economies could cause additional AUD/EUR volatility.

The Australian Dollar to Euro (AUD/EUR) exchange rate was trending in the region of 0.6873 on Wednesday.

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