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

 

Power Outages, Roads Close: Easter Storm Moving Down Country

The NZ Transport Agency says storm conditions at the start of the Easter break are making driving hazardous in Auckland and Northland and it advises people extreme care is needed on the regions’ state highways and roads... More>>

ALSO:

Houses (& Tobacco) Lead Inflation: CPI Up 0.3% In March Quarter

The consumers price index (CPI) rose 0.3 percent in the March 2014 quarter, Statistics New Zealand said today. Higher tobacco and housing prices were partly countered by seasonally cheaper international air fares, vegetables, and package holidays. More>>

ALSO:

Notoriously Reliable Predictions: Budget To Show Rise In Full-Time Income To 2018: English

This year’s Budget will forecast wage increases through to 2018 amounting to a $10,500 a year increase in average full time earnings over six years to $62,200 a year, says Finance Minister Bill English in a speech urging voters not to “put all of this at risk” by changing the government. More>>

ALSO:

Prices Up, Volume Down: March NZ House Sales Drop 10% As Loan Curbs Bite

New Zealand house sales dropped 10 percent in March from a year earlier as the Reserve Bank’s restrictions on low-equity mortgages continue to weigh on sales of cheaper property. More>>

ALSO:

Scoop Business: Chorus To Appeal Copper Pricing Judgment

Chorus will appeal a High Court ruling upholding the Commerce Commission’s determination setting the regulated prices on the telecommunications network operator’s copper lines. More>>

ALSO:

Earlier:

Cars: Precautionary Recalls Announced For Toyota Vehicles

Toyota advises that a number of its New Zealand vehicles are affected by a series of precautionary global recalls. Toyota New Zealand General Manager Customer Services Spencer Morris stressed that the recalls are precautionary. More>>

ALSO:

'Gardening Club': Air Freight Cartel Nets Almost $12 Million In Penalties

The High Court in Auckland has today ordered Swiss company Kuehne + Nagel International AG to pay a penalty of $3.1 million plus costs for breaches of the Commerce Act. Kuehne + Nagel’s penalty brings the total penalties ordered in this case to $11.95 million ... More>>

ALSO:

Crown Accounts: Revenue Below Projections

Core Crown tax revenue has increased by $1.9 billion (or 5.0%) compared to the same time last year. However this was $1.1 billion less than expected and is reflected across most tax types, continuing the pattern of recent months. More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news