NZD/USD retreats from monthly top, still above 0.6100, on Fonterra earnings, RBNZ’s Ha

• NZD/USD trims gains from the monthly top of 0.6159 flashed the previous day.
• Fonterra cuts 2019-20 mild price forecast to NZ$7.10-NZ$7.30/kg due to softer global demand.
• RBNZ’s Chief Economist Ha suggests no rate change till March 2021.
• Markets stay risk-on as equities cheer clues for further monetary/fiscal easing.

NZD/USD struggles to justify mixed clues from RBNZ’s Chief Economist Ha and Fonterra’s downbeat earnings while taking rounds to 0.6145 at the start of Thursday’s Asian session. The pair refreshed monthly high to 0.6159 the previous day amid broad US dollar weakness and market’s risk-on sentiment backed by the equities’ rise.

Fonterra downgrades milk price forecasts….

New Zealand’s key dairy producer Fonterra matched wide market expectations of reducing the milk price forecasts affected by the coronavirus (COVID-19) crisis. The dairy giant now anticipates 2019-20 milk price of NZ$7.10-NZ$7.30/kg versus the previous forecast between $7 and $7.60/kg. The earning statement cites softer global demand as the catalyst behind cutting the mild price estimation. The key economic player also forecasts the 2020-21 milk price of NZ$5.40-6.90/kg. It should also be noted that the dairy leader posted a 59% jump in nine-month underlying profits.

It’s worth mentioning that analysts at the Australia and New Zealand Banking Group (ANZ) have already anticipated such fall while saying, “No matter where the price lands it will be significantly lower than the 2019-20 season for which Fonterra expects to pay its suppliers a milk price between $7 and $7.60/kg.”

RBNZ’s Ha keeps support for hold till March 2021…

While speaking at the latest webinar, RBNZ’s Chief Economist Yuong Ha favored no rate change until March 2021. The central bank board member earlier expected a fall in house prices as well as a slump in migration.

Following the catalysts, the Kiwi steps back from extending the previous day’s gains while also refraining from a heavy fall. The quote rose to the highest in a month on Wednesday amid broad US dollar weakness while also taking advantage of the rise in stocks. In doing so, the NZD/USD prices seem to have ignored the US-China and the Aussie-Sino tussles.

Though there were a few catalysts suggesting greenback’s further weakness, despite FOMC minutes reiterating support for loose monetary policy, Wall Street benefited from wide expectations of further monetary/fiscal easing from major central banks/governments.

That said, the pair traders now have a few catalysts to watch other than waiting for the month-start second-tier activity numbers from Australia. However, updates concerning the trade wars and virus remain important to follow.

Technical analysis

Unless breaking 100-day EMA and April top, surrounding 0.6170/75, the kiwi pair is less likely to avoid witnessing a pullback towards 0.6100 round-figure.