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

 


NZ Dollar Outlook: Kiwi may fall this week on US strength

NZ Dollar Outlook: Kiwi may fall this week as signs of US recovery support greenback

By Tina Morrison

May 13 (BusinessDesk) - The New Zealand dollar may decline this week as a resurgent US currency is buoyed by optimism growth is accelerating in the world's largest economy.

The kiwi dollar recently traded at 82.77 US cents, from 82.98 cents late Friday in New York, and earlier touched a seven-week low of 82.58 cents. The dollar may trade in a range of 81.50 US cents to 84 US cents this week with a downside bias, according to a BusinessDesk survey of five strategists and traders.

The US dollar index, a measure of the greenback against a basket of six major currencies, rallied through the end of last week to 83.143, its highest weekly close since July 2008, according to HiFX, and was last at 83.217.

"It's a case of the US dollar strengthening against most major currencies," said Dan Bell, currency strategist at HiFX. "Expectations are that the US economy is improving and it will outperform the rest of the world in the second half of the year."

New Zealand had been one of the most attractive currencies for speculators and that position is now reversing, Bell said.

Traders may push the greenback higher on signs of improving US retail sales in a report out tonight, said BNZ strategist Mike Jones. Expectations are for a 0.3 percent decline in the month although the ex-auto figure may be key as lower gasoline prices in April likely boosted non-auto spending, he said.

"The risk is we see a relatively upbeat number which could add to the support in the short term," Jones said.

Also in the US this week, traders will be watching a speech by the Federal Reserve Bank of Philadelphia President Charles Plosser, indications of homebuilder sentiment from the NAHB/Wells Fargo Housing Market index, April industrial production and housing start figures, jobless claims and the Empire manufacturing index.

A Wall Street Journal report on Friday said the US Federal Reserve is planning to slow its policy of quantitative easing, winding down an unprecedented US$85 billion-a-month bond-buying program on confidence the US economy is improving.

Quantitative easing in the US has helped underpin higher-yielding currencies such as the kiwi and driven stock markets higher. Any sign of weakness in equities could be taken as a sign traders are betting QE is coming to an end as the US economy improves, said Derek Rankin of Rankin Treasury Advisory. Should stocks remain strong, it suggested US dollar gains were short term, he said.

Locally, a report tomorrow may show New Zealand retail sales rose 0.8 percent in the first quarter from the previous three months, according to a Reuters survey of eight economists.

Results of the latest GlobalDairyTrade auction of dairy products are due out early Thursday morning, followed by the BNZ- BusinessNZ Performance of Manufacturing survey for April.

Also on Thursday, the National-led government reports its fifth budget where it is expected to say it is on track for a surplus in the 2015 financial year, despite extra spending on reconstruction from the Canterbury earthquake.

The government may detail plans to improve housing affordability by increasing supply, UBS economist Robin Clements said in a note. The national median sale price jumped 7 percent in April from a year earlier driven by increases in Auckland and Christchurch, according to Real Estate Institute figures released today.

The budget is likely to focus investor attention on the relative strength of the New Zealand economy and push the currency higher, said BNZ's Jones.

"The budget is going to highlight the fact that New Zealand remains in a relatively enviable position as far as the rest of the world goes," he said, citing higher relative interest rates and strong commodity prices. In comparison, the US economy still has some hurdles to overcome to achieve sustainable growth, he said.

The New Zealand dollar's slide was unlikely to be sustained and exporters would probably buy the currency at the 81.50 US cent to 82 cent level to bring home their overseas revenue, Jones said.

Meanwhile, the monthly ANZ-Roy Morgan consumer confidence report will provide an update on sentiment on Friday. The measure has increased in four out of the last six months to sit at an above-average level.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Broadband Network: Spark Launches New, Competitive Ultra Fibre Plan Line-Up

Spark is giving customers an even more compelling reason to switch to its Ultra Fibre plans from today with the introduction of new competitive pricing for the majority of its plans (details below) and Fibre Landline (voice-over-fibre technology) for ... More>>

Employment: ANZ Proposes Casualisation In Whangarei Stores

ANZ workers in Whangarei could see their incomes drop by 20 to 40 percent if the bank’s proposal to reduce the number of full-time positions goes ahead says FIRST Union national organiser Tali Williams. More>>

Finance: BNZ Develops Specialist Tāmaki Māori Banking Team

BNZ develops specialist Tāmaki Māori Banking Team to support Māori as Auckland grows More>>

Pharmaceuticals: Commerce Commission To Consider Pharmaceuticals Merger

The Commerce Commission has received an application from Pfizer Inc. seeking clearance to acquire all of the shares in Hospira Inc. More>>

Real Estate: Housing Unaffordability Issues Spread

Surging house prices in Auckland and Queenstown last month pushed home ownership even further beyond the reach of first home buyers in the two districts, according to the AMP360 Home Loan Affordability Report for March. More>>

Statistics NZ: Annual Exports To China Dip Below Australia

The value of goods exports to Australia ($8.7 billion) surpassed those to China for the year ended March 2015, Statistics New Zealand said today. More>>

Science: Hookworm Discovery At Malaghan Institute

Professor Graham Le Gros has led a team which has stimulated both innate and memory responses to the parasite, discovering along the way the unexpected behaviour of one particular immune cell, in Hookworm, one of the world’s most devastating tropical ... More>>

Business: Provinces Urged To Make Full Use Of New Air Services

Provincial New Zealand has been urged to use new air services to Auckland or risk losing them either partially or completely. The stark warning was issued today by Far North mayor John Carter at a ceremony at Kaitaia airport to mark the final Air ... More>>

Mobile: 2degrees To Credit All Calls And SMS To Nepal

In the wake of the devastating earthquake in Nepal in the weekend, 2degrees will be crediting all calls and SMS messages made to mobiles and landlines in Nepal from Friday 24th April until midnight Wednesday 29th April. More>>

Scoop Business: Alex Swney Pleads Guilty To $2.5M Fraud Charge

Alex Swney, former chief executive of the Auckland city centre business association Heart of the City, has pleaded guilty to dishonestly using documents to obtain $2.5 million. More>>

ALSO:

Petrol Burns Prices: Second Consecutive Quarterly Fall For CPI

The consumers price index (CPI) fell 0.3 percent in the March 2015 quarter, following a 0.2 percent fall in the December 2014 quarter, Statistics New Zealand said today. The last time the CPI showed two consecutive quarterly falls was in the December 1998 and March 1999 quarters. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news