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The NZD/USD pair is starting to respond to hard economic data. Dairy prices are vulnerable over the next few months, according to analysts at Westpac Institutional Bank.

Key quotes

“Optimism that healthy core foods may be immune from the broader decline in global commodities may fade if dairy prices paid by China – NZ’s main export market – fall in response to rising northern hemisphere supply and falling demand.”

“If, as we expect, dairy prices do fall over the next few months, and if the NZD market again becomes sensitive to commodity news, NZD/USD will find itself back in the 0.56-0.58 zone by midyear.