Of the three “commodity currencies,” the New Zealand Dollar has been the weakest, perhaps due to a new dual mandate that the Reserve Bank of New Zealand was given in 2018. That mandate mirrors the U.S. Federal Reserve’s: to maximize employment and control inflation. Not sure how it might impact currency prices?
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Milk prices. If you want to trade the New Zealand Dollar, or Kiwi, you should pay attention to milk prices. That’s because dairy contributes more than 3% to New Zealand GDP and is the largest export sector for the economy. Higher milk prices are good for exporters and can drive inflation higher — all of which can cause the Reserve Bank of New Zealand to raise interest rates, resulting in a stronger Kiwi.
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In 2018, NZD/USD hit its lowest point in more than two years and could even be targeting 2015 lows at 0.6150. Though that would still be another 10+% drop from mid-2018 levels, it’s not out of the question. After all, it would match a 10% drop that the Kiwi had in the second half of 2017.
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