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Morgan Stanley: NZD/USD doomed to decline

Analysts at major US bank remain bearish on the New Zealand dollar for the following reasons:

  • Price and import demand in whole milk powder will fall further
  • Fonterra is expected to further reduce its payout forecast for 2014/15
  • China will reduce demand for imports in the near term given excess inventories
  • “We expect the recent peak in dairy prices, the lift of EU dairy quota and lower feed costs to increase global milk production. In particular, global dairy export volume is forecasted by the USDA to increase by 10% in 2014.”
  • “Weakness in dairy price and muted inflation levels will likely prevent the RBNZ from hiking for some time to come.”

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