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

 


NZ Dollar Outlook: Kiwi may fall amid Italian election, Fed

NZ Dollar Outlook: Kiwi may fall as Italian election, Bernanke, BOJ lead event risks

Feb. 25 (BusinessDesk) – The New Zealand dollar may fall in a week when the Italian election outcome, testimony by Federal Reserve chairman Ben Bernanke and the appointment of a new Bank of Japan governor loom as the biggest event risks.

The kiwi dollar recently traded at 83.56 US cents, down from 83.73 cents in late New York trading on Friday. The trade-weighted index was little changed at 76.50, as the kiwi gained against the pound, the yen, and the Australian dollar and fell versus the euro.

The New Zealand dollar heads into the week with a backwind of bullish bets, leaving it vulnerable to disappointment. Speculative long positions in the kiwi are at their highest since July 2007, according to Mike Jones, strategist at Bank of New Zealand, which is “a flashing red signal” given the currency has fallen in that past 4-5 times longs have built up.

Traders are fretting the Italian election won’t be a clean result while Bernanke’s two-day testimony comes after FOMC minutes showed division within the Fed about the scope of quantitative easing. Meantime, the kiwi has advanced against the yen today following media reports that Asian Development Bank chief Haruhiko Kuroda is Prime Minister Shinzo Abe’s favoured BOJ candidate and shares his vision to stimulate the economy.

“There are a lot of events that could influence the kiwi in both directions,” BNZ’s Jones said. “The only thing we can be sure of is more volatility over the week.” He’s picking “some modest downside for the kiwi this week.”

Traders and investors will also be kept busy with events closer to home. The Reserve Bank survey of expectations for the first quarter is due tomorrow and merchandise trade for January is out on Wednesday. Thursday brings the ANZ Business Outlook and Australian capital spending for the fourth quarter, and spending intentions, amid widespread expectations investment in the mining sector is peaking.

Bernanke's semi-annual update for US lawmakers on Tuesday and Wednesday will be closely watched after minutes from the latest Fed meeting sparked concern the central bank might ease or end its stimulus measures sooner than expected.

“In terms of what happened last week in the minutes you would be crazy to think there won’t be some debate on how to back the bus out of the blind alley,” said Alex Sinton, senior dealer at ANZ New Zealand. “There is no easy out and there will be market volatility.”

Sinton said there’s scope for further movements in the pound, with the market “yet to fully digest the UK downgrade” by Moody’s Investors Service to Aa1 from Aaa. It would not surprise the market if Standard & Poor’s were now to follow suit, he said.

The kiwi recently traded at 55.20 British pence from 54.93 pence in New York on Friday.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Prefu Roundup: Forecasts Revised, Surplus Intact

The National government heads into the election with its Budget surplus target broadly intact, delivering a set of economic and fiscal forecasts marginally revised from May to reflect weaker commodity prices and a lower tax take. More>>

ALSO:

Convention Centre: Major New SkyCity Hotel And Laneway For Auckland

Today SKYCITY Entertainment Group Limited revealed plans to build a new hotel and pedestrian laneway of bars, restaurants and boutique shopping on land it owns in the Nelson and Hobson Streets block, expanding the SKYCITY Entertainment Precinct. More>>

ALSO:

Igniting The Spark: Bringing The Digital Enabler To Life

Changing a name is, relatively speaking, the easy part of a re-invention. Changing a culture, getting all the ducks in a row, turning yourself inside-out to become customer-inspired is a much bigger challenge. More>>

ALSO:

Ebola And NZ: Targeted Screening At Airport But Risk Low

The risk of any cases of Ebola in New Zealand remains very low, but health and border authorities are well prepared... anyone arriving in New Zealand who in the last three weeks has visited countries affected will be screened for symptoms of the disease. More>>

ALSO:

Scoop Business: Brewer Seeking Crowd-Funding Cancels Shareholders’ Dividends

Shareholders in Renaissance Brewing company, the first business to seek equity through crowd-funding in New Zealand, have cancelled their claim on $147,000 of accumulated earnings “to make Renaissance a more attractive investment opportunity.” More>>

ALSO:

It's Spark Now:
Why Telecom Wanted To Change

New Zealand led the world when Chorus demerged from Telecom. It gave us a telecommunications industry structure where the network is completely separated from the products and services it delivers. The changes brought about a new market dynamic and it dramatically changed Telecom’s role. More>>

ALSO:

Glass Half Empty: Dairy Prices Fall To Lowest Since 2012

Dairy product prices slumped to the lowest level since October 2012 in the latest GlobalDairyTrade auction, paced by whole milk powder and cheddar. More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus

Standards New Zealand

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