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

 


NZ Dollar Outlook: Kiwi may fall as investors ponder economy

NZ Dollar Outlook: Kiwi may fall as investors ponder strength of economy

By Jonathan Underhill

Nov. 12 (BusinessDesk) - The New Zealand dollar, trading near a three-week low, may fall further amid concerns last week’s jobs data shows the domestic economy is struggling, putting the focus on upcoming figures including retail sales this week.

The kiwi dollar recently traded at 81.45 US cents, down from81.67 cents in late New York trading on Friday. Traders say 81 cents is the next key support and is a level it hasn’t broken below since Sept. 11. Five of six traders and strategists in a BusinessDesk survey say the kiwi may weaken this week.

As at its September monetary policy statement, the Reserve Bank had economic growth of 0.4 percent pencilled in for the third quarter after growth in the second quarter beat its estimate at 0.6 percent. But figures last week showed unemployment climbed to a 13-year high of 7.3 percent, stoking concern the economy has lost pace. Retail sales for the third quarter, due on Wednesday, are expected to have risen 0.5 percent, down from the second quarter’s 1.3 percent pace.

“After the employment data last week, nothing is going to look positive enough,” said Alex Sinton, senior dealer at ANZ New Zealand. “There’s further downside for the kiwi.”

Retail sales are followed by the NZ Performance of Manufacturing Index on Thursday which ANZ forecasts remained below 50 in October, meaning the sector was still in contraction.

Third-quarter gross domestic product isn’t released until Dec. 20 and the Reserve Bank will have updated its forecasts before then with the next MPS on Dec. 6. Markets are pricing in a 22 percent chance of a cut to the official cash rate at the central bank's next meeting, based on the Overnight Interest Swap curve.

“There’s going to be underlying scepticism about how well the New Zealand economy is performing,” said Dan Bell, strategist at HiFX. “Overall it continues to look like (third quarter growth) was pretty average.” He doubts governor Graeme Wheeler will move on interest rates on Dec. 6.

Traders took some heart over the weekend at figures showing China’s export growth accelerated in October while its trade surplus grew to a four-year high US$32 billion. But import data was less impressive, raising questions about continued demand for goods from Australia and New Zealand which count China as biggest and second-biggest export market respectively.

This week also heralds the change to Chinese leadership as the Communist Party meets to decide the make-up of its central committee.

In the US, the Federal Open Market Committee minutes are released on Wednesday but the biggest theme from the world’s largest economy will be whether Washington can find a way to agree on dealing with the fiscal cliff, which if left untended will see fiscal spending slashed and the economy likely heading back into recession.

“There’s some talk a fiscal cliff deal can be done,” ANZ’s Sinton said. “It’s all about implementation. Politicians can say an awful lot.”

Last year the kiwi dollar sold off after Republicans in the Congress held off on agreeing to lift the debt ceiling to ensure federal services could still be paid for. America’s credit rating was cut by Standard & Poor’s. Ironically, the greenback tends to rise in the face of US economic woes, which drive investors towards the world’s reserve currency and US Treasuries.

In Europe, Greek politicians will vote today on the country’s 2013 budget -- which includes more austerity measures, though it may be several more weeks until Greece’s international lenders transfer fresh bailout funds. EU finance ministers await a report on the country’s compliance with bailout terms.

Globally this week “is looking like more of a risk-off scenario, but not intense,” said Derek Rankin, of Rankin Treasury Advisory.

He’s expecting buying interest from Europeans in both the kiwi and Australian dollars as investors seek the relative stability and higher yields on offer down under.

The kiwi dollar last traded at 64.03 euro cents from 64.06 cents on Friday in New York. It has traded in a range of about 62.20 euro cents to 65 cents since late August.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Future Brighter Money: RBNZ Releases New Bank Note Designs

New Zealand’s banknotes are getting brighter and better, with the Reserve Bank today unveiling more vibrant and secure banknote designs which will progressively enter circulation later next year. More>>

ALSO:

Commerce: Supermarket Inquiry Finds No Breaches By Countdown

The Commerce Commission inquiry into anti-competitive behaviour by Countdown supermarkets, alleged by former Labour Party MP Shane Jones, has found nothing to warrant prosecution, although it warns supermarkets to take care in the way they communicate... More>>

ALSO:

Crown Accounts: English Flags ‘Challenge’ To Budget Surplus

Finance Minister Bill English is warning next month’s half yearly fiscal and economic update from the Treasury may not forecast a budget surplus, saying that returning the government’s accounts to surplus in 2015 will be “a challenge”, given the decline in commodity prices and weak global inflation. More>>

ALSO:

March 2015: Netflix To Launch In Australia And New Zealand

World’s Leading Internet Television Network to Offer Original Series, Movies, Documentaries, Stand-Up Comedy Specials and TV Shows for Low Monthly Price More>>

ALSO:

Price Of Cheese (Is Up): Dairy Product Prices Fall To Five-Year Low

Dairy product prices fell in the latest GlobalDairyTrade auction to the lowest level in more than five years, led by declines in rennet casein and skim milk powder. More>>

ALSO:

Gordon Campbell: On The Australians Scoring Trade Points Against Us With The Chinese

It hasn’t been a great year for Trade Minister Tim Groser... To top it off, Australia has just signed a FTA with China that has far better provisions on dairy exports than what New Zealand currently enjoys in our own FTA with China. More>>

ALSO:

Iwi & Local Consultation: Oil And Gas Block Offer 2015 Begins

Energy and Resources Minister Simon Bridges today announced the start of the Block Offer 2015 process for awarding oil and gas exploration permits. More>>

Industrial Action: Stats NZ Throwing Public Money Away Duplicating Data

The Public Service Association (PSA) says Statistics NZ are throwing money away by collecting the same data twice for official statistics such as the Consumer Price Index... As part of the ongoing industrial action, field interviewers who are PSA members are continuing to collect data, but are not sending it through to Statistics NZ. More>>

ALSO:

Other Stats:

Space: Rosetta's 'Philae' Makes Historic First Landing On A Comet

After more than a decade traveling through space, a robotic lander built by the European Space Agency has made the first-ever soft landing of a spacecraft on a comet. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

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