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

 


NZ Dollar Outlook: Kiwi may gain as acid goes on US recovery

NZ Dollar Outlook: Kiwi may gain as acid goes on US recovery after weak jobs figure

By Paul McBeth

Jan. 13 (BusinessDesk) - The New Zealand dollar may gain this week as investors tune into US economic indicators after a weak reading of the labour market on Friday sparked fears the Federal Reserve may stall plans to scale back its monetary stimulus, while New Zealand’s upbeat outlook is expected to be reaffirmed by local data.

The local currency may trade between 82 US cents and 84.30 cents this week, according to a BusinessDesk survey of nine traders and strategists. Eight predict the currency will gain, and one expects it to decline. The kiwi recently traded at 82.94 US cents from 82.99 cents at 8am in Wellington.

Weak jobs figures on Friday in Washington surprised investors who were looking for a faster recovery in the labour market, and prompted traders to reassess their expectations as to how quickly the Fed will pull back its monthly asset purchase programme. A slew of Fed officials are speaking this week, including outgoing chairman Ben Bernanke on Thursday in Washington, and will be watched for insight into the winding down its quantitative easing.

Freezing conditions in the US have been blamed for much of the weak employment market, and investors will be looking at the Fed’s beige book, the Philadelphia Fed survey and Empire manufacturing survey see how much of an impact the harsh winter has had on the world’s biggest economy.

At the same time, the New Zealand Institute of Economic Research’s quarterly survey of business opinion tomorrow is expected to show another upbeat assessment of the local economy, feeding into expectations the country’s recovery is gathering pace.

Sam Tuck, senior FX strategist at ANZ New Zealand in Auckland, said the kiwi will be supported by “potential for a strong QSBO and some more weather-related figures” from the US. He expects the currency will push up to the 84 US cents area, though stay within its long-term range.

US corporate earnings season will also capture traders’ attention, with investors looking for revenue growth rather than cost cutting measures, and any sign of strength may ease concerns stoked by the weak jobs report.

That’s one of the reasons why OMF senior adviser Stuart Ive has a negative bias for the kiwi this week, saying the employment report is one piece of data and is unlikely to hold up the Fed’s plans.

“Overall the kiwi may edge higher over time, but I find it hard to believe we’re going to break to the upside here,” Ive said. “I don’t think the numbers of Friday were enough to break out of the current range.”

Traders are waiting for next week’s fourth-quarter consumer price index ahead of the Reserve Bank’s first policy review on Jan. 31 to firm up their views on the pace of the local tightening cycle. Markets have priced in 116 basis points of increases to the 2.5 percent official cash rate over the coming 12 months, according to the Overnight Index Swap curve.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Media: Julian Wilcox Leaves Māori TV

Māori Television has confirmed the resignation of Head of News and Production Julian Wilcox. Mr Maxwell acknowledged Mr Wilcox’s significant contribution to Māori Television since joining the organisation in 2004. More>>

ALSO:

Genetics: New Heat Tolerant Cow Developed

Hamilton, New Zealand-based Dairy Solutionz Ltd has led an expert genetics team to develop a new dairy cow breed conditioned to thrive in lower elevation tropical climates and achieve high milk production under heat stress. More>>

Fractals: Thousands More Business Cards Needed To Build Giant Sponge

New Zealand is taking part in a global event this weekend to build a Menger Sponge using 15 million business cards but local organisers say they are thousands of business cards short. More>>

Scoop Business: NZ Net Migration Rises To Annual Record In September

New Zealand’s annual net migration rose to a record in September, beating government forecasts, as the inflow was spurred by student arrivals from India and Kiwis returning home from Australia. More>>

ALSO:

Scoop Business: Fletcher To Close Its Christchurch Insulation Plant, Cut 29 Jobs

Fletcher Building, New Zealand’s largest listed company, will close its Christchurch insulation factory, as it consolidates its Tasman Insulations operations in a “highly competitive market”. More>>

ALSO:

Scoop Business: Novartis Adds Nine New Treatments Under Pharmac Deal

Novartis New Zealand, the local unit of the global pharmaceuticals firm, has added nine new treatments in a far-ranging agreement with government drug buying agency, Pharmac. More>>

ALSO:

Crown Accounts: English Wary On Tax Take, Could Threaten Surplus

Finance Minister Bill English is warning the tax take may come in below forecast in the current financial year, as figures released today confirm it was short by nearly $1 billion in the year to June 30 and English warned of the potential impact of slumping receipts from agricultural exports. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand

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