Heading into Jackson Hole and FOMC Chairwoman, Janet Yellen’s, speech, investors are treading water. If nothing comes out of Jackson Hole in terms of clarity on the FOMC, investors would like continue to pursue carry trades until there is a clearer picture on the FOMC, likely from key US economic in the coming weeks. The NZD strengthened in early Asia.
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NZD/USD tested back toward its YTD highs and AUD/NZD briefly traded below 1.04 on the back of Fonterra raising its forecast payout to farmers by NZD50cents to NZD4.75 per KG/MS following the recent strength in dairy auction outcomes. The new payout will bring most farmers close to their breakeven levels after having operated at a loss for most of last season.
With the RBNZ Governor, Graeme Wheeler, effectively stepping aside from trying to jawbone the NZD lower, the near-term risk for the NZD is to the upside unless Yellen changes her tune and sounds hawkish.