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

 

Bad Day For Rope: Donaghys Job Losses Another Blow To Dunedin

The loss of 30 jobs from Donaghys rope and twine factory is yet another blow to the people and economy of Dunedin, says Dunedin South Labour MP Clare Curran. More>>

ALSO:

Oil: 2014 New Zealand Petroleum Summit

Simon Bridges: Our abundance of energy and minerals resources provides us with unique opportunities to build the New Zealand economy.

Over the past three years the Government has made significant changes to how the sector is regulated. More>>

ALSO:

WWF Report: Solutions In Reach; World Biodiversity Suffers Major Decline

Global wildlife populations have declined by more than half in just 40 years as measured in WWF's Living Planet Report 2014. Wildlife's continued decline highlights the need for sustainable solutions to heal the planet... More>>

ALSO:

Scoop Business: NZ Dollar Catches Breath After "Goldilocks" Slump

The New Zealand dollar edged up following its dramatic slump yesterday after the Reserve Bank confirmed speculation it intervened in the currency market last month and PM John Key suggested a “Goldilocks” level far lower than at present. More>>

ALSO:

Biosecurity: Kiwifruit Claim To Hold Officials Accountable For Psa

Kiwifruit growers have joined forces to hold Biosecurity NZ accountable in the courts for its negligence in allowing 2010’s Psa outbreak that devastated New Zealand’s kiwifruit industry and exports. Foundation claimants representing well ... More>>

ALSO:

Poison: Anglers Advised Not To Eat Trout In 1080 Areas

With the fishing season opening in just a few days (1 October 2014), anglers are being warned by the Department of Conservation(DOC) not to eat trout from pristine backcountry waters and their downstream catchments, where the department is conducting 1080 poisoning operations. More>>.

ALSO:

Get More From Scoop

 
 
Computer Power Plus

Standards New Zealand

Standards New Zealand

Mosh Social Media
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news