NZ commodity basket’s rise is consistent with the NZD’s rally this year - Westpac

Imre Speizer, Research Analyst at Westpac, notes that the NZD/USD continues its month-old rally, and is on the verge of breaking above the sticky 0.7325 area.

Key Quotes

“Should the break be sustained, the next likely congestion area would be around 0.7500 (as it was during the first half of 2015).

The story of excess global liquidity scouring the world for high yields in a low yield regime, and some of this reaching the NZD, is widely acknowledged.

However, during the last few months, NZ commodity prices have also probably played a part. Whole milk powder prices jumped 30% in August, for a total gain of 42% since February. And many of the less hyped commodities have also done well (e.g. horticulture), so that the NZ commodity basket’s rise is consistent with the NZD’s rally this year.”