Unexpected resignation of the Prime Minister of New Zealand today has caused sharp decline in the NZD. Prime Minister John Key also spoke about his intention to resign as leader of the ruling conservative party. Although resignation of the Key will have only short-term impact on the New Zealand’s economy, some economists believe that this resignation may lead to the political uncertainty, which will negatively affect confidence to the business community in 2017, which will also have a negative impact on the national currency.
Today after 17:00 (GMT+3) price index of dairy products will become known. This index usually increases volatility in the New Zealand dollar. At the auction two weeks ago prices of dairy products have grown by 4.5%. Note that dairy products including milk powder are the main items of the country's export.
The rise in prices of the dairy products in the few past weeks was caused by the reduction of production in New Zealand, which is also the largest exporter of milk.
If dairy prices will increase, the pair NZD/USD will go up. Analysts expect the rise in prices.
If it happens the New Zealand dollar will receive support in the foreign exchange market.
Otherwise, the NZD/USD will continue the decline, which started today.
The pair NZD/USD will be also affected by today’s US new, which will be known at 18:00. It is expected that manufacturing orders in the USA will grow by 2.6% in October after the rise of 0.3% in September, and this will have a positive impact on the USD and on the pair NZD/USD.