NZ dollar heads for 1.2% gain on TWI as economy grows, speculation on Fonterra payout
March 22 (BusinessDesk) - The New Zealand dollar is heading for a 1.2 percent weekly gain on a trade-weighted basis after figures showed the economy grew at almost twice the Reserve Bank's expected pace in the fourth quarter and amid talk Fonterra Cooperative Group may hike its payout next week.
The kiwi rose to 76.46 on the trade-weighted index at 5pm in Wellington from 76.16 yesterday. It gained to 83.12 US cents from 82.73 cents yesterday, and is heading for a 0.6 percent weekly gain.
The local currency rallied after government figures yesterday showed gross domestic product grew 1.5 percent in the three months ended Dec. 31, almost twice the Reserve Bank's expectations. That comes as investors wait for Fonterra's first half earnings next week, which are expected to include an increase in the forecast payout to farmers as drought saps the domestic supply of dairy products.
"The kiwi's firmed a little and might go up a bit," said Imre Speizer, market strategist at Westpac Banking. "It fell below 83 US cents a few weeks ago, and now it knocking back on the door" of the higher range, he said.
Speizer said the currency may rally against the Australian dollar after a "stonking GDP." It rose to 79.80 Australian cents from 79.67 cents yesterday.
Markets will keep watching for any movement in Cyprus on a potential bailout package as the Mediterranean nation threatens the rest of the European Union. The local currency gained to 64.43 euro cents from 63.87 cents yesterday.
The kiwi slipped to 79.01 yen from 79.31 yen yesterday, and increased to 54.80 British pence from 54.67 pence.