Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


NZ Dollar Outlook: Kiwi may fall on stronger US jobs data

NZ Dollar Outlook: Kiwi may fall on stronger US data; NZD may rise against Aust dollar

By Hannah Lynch

Oct. 8 (BusinessDesk) - The New Zealand dollar may finish the week lower against the greenback after better-than-expected US jobs data stoked bets growth in the world’s biggest economy is building momentum. It may gain against its trans-Tasman counterpart as the employment situation in Australia dims.

The New Zealand dollar recently traded at 81.69 US cents from 81.60 cents at 8am in Wellington. That's right in the middle of this week's forecast trading range of between 80.40 US cents and 83 cents, according to a BusinessDesk survey of five analysts.

All five of the analysts predict the kiwi will finish the week lower.

Friday's US unemployment rate was significantly better than expected, helping boost equities and risky currencies. The effects were short-lived, with Wall Street's Standard & Poor's index falling 0.3 percent. The US jobless rate fell to 7.8 percent last month, the lowest level since January 2009, according to Labor Department data. Payrolls increased by 114,000 workers.

Markets will get more of a feel about the shape of the latest round of quantitative easing on Wednesday when the Federal Reserve's Beige Book is released. The central bank's Beige Book of regional economic activity from the 12 Fed districts is designed to provide anecdotal evidence of the world's largest economy.

"It does look like the kiwi is breaking down slowly and momentum is pointing lower," said Imre Speizer, market strategist at Westpac Banking Corp.

Australia, New Zealand's largest trading partner, will release its jobless rate on Thursday. A survey of 20 Reuters economist predicts it rose to 5.3 percent from 5.1 percent, with the participation rate unchanged at 65 percent.

"The biggest effect on the New Zealand dollar at the moment is the weaker Australian dollar as the markets enthusiastically price in further RBA cuts," said Peter Cavanaugh, senior client adviser at Bancorp Treasury. "There are strong hints there is more to come and the market is expecting it."

Last week, the Reserve Bank of Australia cuts its key interest rate by a quarter of a point to 3.25 percent, citing weaker commodity prices in a global market where the outlook for economic growth “has softened”.

The New Zealand dollar recently traded at 80.35 Australian cents little changed from 80.30 cents at 8am. It climbed above 80 Australian cents last week after the RBA cut eroded the favourable interest rate differential across the Tasman. The yield on Australia's benchmark 10-year government bond was recently at 3.095 percent compared to a 3.545 percent yield on New Zealand's equivalent.

In Europe, finance ministers meet on Tuesday in Luxembourg where the agenda will be dominated by Spain’s economic reforms and Mediterranean nation's reluctance to formally ask for a financial bailout. Spain would be the first European nation to participate in the European Central Bank’s bond-buying programme.

"Spanish pride is on the line," Cavanaugh said. "It is a game of brinkmanship - they don't want to be pushed into it."

Ministers from the wider European Union meet on Wednesday.

Germany’s estimated inflation figures for September are released on Friday. It is expected to show zero growth in consumer prices, month-on-month, and an annual 2 percent increase in the consumer price index.

The New Zealand dollar fell to 62.76 euro cents from 62.65 cents at 8am.

Out today in Asia is Japan’s trade balance and current account figures for August. On Thursday, China reports new yuan loans for September and Australia’s employment data is also out on Thursday.

There is no significant New Zealand data set for release until Tuesday’s New Zealand Institute of Economic Research quarterly survey of business opinion, QV monthly house prices and electronic card transactions from Statistics New Zealand. That's followed by the accommodation survey for August on Thursday and the food price index for September on Thursday.

ANZ-Roy Morgan Consumer Confidence and Bank of New Zealand performance manufacturing index are set for release on Thursday.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Strike: Lyttelton Port Workers Vote To Escalate Dispute

Members of the Rail and Maritime Transport Union (RMTU) at Lyttelton Port today voted to escalate their industrial action. Around 200 RMTU members have been operating an overtime ban since 17 December and today they endorsed a series of full withdrawals of labour at the port. More>>

ALSO:

Scoop Business: NZ Dollar Falls To 3-Year Low As Investors Favour Greenback

The New Zealand dollar fell to its lowest in more than three years as investors sold euro and bought US dollars, weakening other currencies against the greenback. More>>

ALSO:

Scoop Business: NZ Govt Operating Deficit Smaller Than Expected

The New Zealand’s government’s operating deficit was smaller than expected in the first five months of the financial year as a clampdown on expenditure managed to offset a shortfall in the tax-take from last month’s forecast. More>>

ALSO:

0.8 Percent Annually:
NZ Inflation Falls Below RBNZ's Target

New Zealand's annual pace of inflation slowed to below the Reserve Bank's target band in the final three months of the year, giving governor Graeme Wheeler more room to keep the benchmark interest rate lower for longer.More>>

ALSO:

NASA, NOAA: Find 2014 Warmest Year In Modern Record

Since 1880, Earth’s average surface temperature has warmed by about 1.4 degrees Fahrenheit (0.8 degrees Celsius), a trend that is largely driven by the increase in carbon dioxide and other human emissions into the planet’s atmosphere. The majority of that warming has occurred in the past three decades. More>>

ALSO:

Scoop Business: New Zealand’s Reserve Bank Named Central Bank Of The Year

The Reserve Bank of New Zealand’s efforts to stifle house price inflation by using new policy tools has seen the institution named Central Bank of the year by Central Banking Publications, a publisher specialising in global central banking practice. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news