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

 


NZ Dollar Outlook: Kiwi looks weak this week

NZ Dollar Outlook Kiwi looks weak as market mulls local inflation, housing figures

By Paul McBeth

Jan. 20 (BusinessDesk) - The New Zealand dollar looks likely to fall this week as investors consider how local inflation and housing figures will feed into the Reserve Bank’s interest rate outlook, ahead of next week’s policy review.

The local currency may trade between 81.20 US cents and 84.20 cents this week, according to a BusinessDesk survey of six traders and strategists. Four predict the kiwi will fall this week, while one expects it to gain and one sees it largely unchanged. It recently traded at 82.50 US cents from 82.62 cents at the New York close on Friday.

New Zealand’s consumers price index is forecast to have fallen 0.1 percent in the final three months of 2013, for an annual rate of 1.5 percent, according to a Reuters survey of 11 economists. Local housing sales figures are also in focus as investors gauge the impact of Reserve Bank-imposed restrictions on the level of low equity home lending.

A benign inflation figure and slowing property market may spur investors to push out their expectations for an interest rate hike by the Reserve Bank, which has signalled tighter monetary policy this year. Traders have priced in 110 basis points over increases to the official cash rate over the coming 12 months, according to the Overnight Index Swap curve.

“We might see a slowdown in house sales and weak headline quarterly CPI numbers against the backdrop of a broadly rising US dollar,” said Imre Speizer, market strategist at Westpac Banking Corp in Auckland. “It would be an environment to see kiwi/US dollar selling.”

Those pieces of local data are expected to be the major drivers of the kiwi this week as investors prepare for monetary policy reviews next week by New Zealand’s Reserve Bank and the US Federal Reserve. While the RBNZ is expected to keep rates unchanged, the Fed will be watched for more withdrawal of stimulus in what will be chairman Ben Bernanke’s last meeting in charge.

Another week of US corporate earnings season will also capture traders’ attention, with investors looking for revenue growth rather than cost cutting measures.

Australian inflation data on Wednesday will be used as a bellwether for the trans-Tasman cross-rate, which soared to new eight-year highs last week on the diverging interest rate paths of the neighbouring economies. The kiwi dollar was recently at 94.15 Australian cents from 94.12 cents at the New York close last week.

Investors will be watching Chinese data today, including fourth-quarter gross domestic product figures, industrial production and retail sales, as they try to gauge the strength of the world’s second biggest economy. Fears over the nation’s financial sector re-emerged amid reports Industrial & Commercial Bank of China is refusing to bail out a troubled 3 billion yuan trust product.

Markets in the US are closed on Monday for the Martin Luther King holiday.

(BusinessDesk)


© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Scoop Business: PayPal Stops Processing Mega Payments; NZX Listing Still On

PayPal has ceased processing payments for Mega, the file storage and encryption firm looking to join the New Zealand stock market via a reverse listing of TRS Investments, amid claims it is not a legitimate cloud storage service. More>>

ALSO:

Housing Policy: Auckland Densification As Popular As Ebola, English Says

Finance Minister Bill English said calls by the Reserve Bank Governor for more densification in Auckland’s housing were “about as popular in parts of Auckland as Ebola” would be. More>>

ALSO:

Crown Accounts: NZ Government Deficit Smaller Than Expected In First Half

The New Zealand government's operating deficit was smaller than expected in the first six months of the financial year, as the consumption and corporate tax take rose ahead of forecast in December, having lagged estimates in previous months. More>>

ALSO:

Fruit & Veg Crackdown: Auckland Fruit Fly Find Under Investigation

The Ministry for Primary Industries (MPI) is investigating a find of a single male Queensland fruit fly in a surveillance trap in the Auckland suburb of Grey Lynn... MPI has placed legal controls on the movement of fruit and some vegetables outside of a defined circular area which extends 1.5km from where the fly was trapped in Grey Lynn. More>>

ALSO:

Scoop Business: Westpac NZ Reaches $2.97M Swaps Settlement

Westpac Banking Corp’s New Zealand unit has agreed to pay $2.97 million in a settlement with the Commerce Commission over the way the bank sold interest rate swaps to farmers between 2005 and 2012. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news