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

 


NZ Dollar Outlook: Kiwi likely to fall vs. A$ this week

NZ Dollar Outlook: Kiwi likely to fall vs. A$ this week as RBA removes easing bias

By Tina Morrison

Feb. 3 (BusinessDesk) – The New Zealand dollar will probably decline against its trans-Tasman counterpart this week as signs of a revival in the Australian economy prompt that nation’s central bank to remove its easing bias, turning attention to the next hike rather than the next cut.

The kiwi will probably trade between 91 Australian cents and 93.70 cents, according to a BusinessDesk survey of eight currency strategists and traders. Four expect the kiwi to decline against the Aussie, while one expects a gain and three say it will remain stable. The kiwi recently bought 92.47 Australian cents.

The New Zealand dollar touched an eight-year high against the Aussie last month as New Zealand’s economy benefits from a boom in soft commodities such as dairy while Australia’s economy weakens on waning demand for its mining resources. Still, stronger inflation data in Australia may prompt the central bank to remove its easing bias at its meeting tomorrow, crimping the kiwi’s 14 percent advance over the past year.

“The RBA will remove its easing bias this week,” said Imre Speizer, senior market strategist at Westpac Banking Corp in New Zealand. “Markets may then jump the gun and start to price in some interest rate hikes over the year. That should be a catalyst to push the Aussie up over the kiwi.”

With benchmark interest rates at a record low 2.5 percent in both countries, traders currently expect Australian interest rates to remain largely on hold this year while New Zealand rates are expected to rise 122 basis points, according to the Overnight Swap Curve.

The kiwi may resume its advance against the Aussie once New Zealand rates start rising in March, peaking at around 96 Australian cents mid-year, Speizer said.

The RBA will detail its updated economic forecasts on Friday, with the release of its Statement on Monetary Policy. Other data out in Australia this week includes manufacturing, commodity prices and building approvals today and retail and trade on Thursday.

Traders will also be eyeing the Australian NAB business confidence quarterly survey on Thursday after the monthly reading showed a rebound in December.

In New Zealand, the focus this week will be on Wednesday’s release of fourth quarter employment figures. The nation’s unemployment rate probably dropped to 6 percent from 6.2 percent, while employment growth slowed to a 0.6 percent pace from a 1.2 percent in the third quarter, according to Reuters polls.

The ANZ publishes its world index of commodity prices tomorrow, with the scope for further upside limited after prices rose to the second highest on record in December, UBS economist Robin Clements said in a note. Fonterra’s Global Dairy Trade Auction results are due on Wednesday.

Meanwhile, Auckland realtor Barfoot & Thomson is expected to publish its latest data for January mid-week. New Zealand markets will close Thursday for the Waitangi Day public holiday.

In the US, traders will be focused on the key non-farm payrolls report on Friday as they mull the likely pace of future tapering of monetary stimulus by the Federal Reserve. Payrolls probably climbed by 180,000 workers in January after the coldest December since 2009 chilled job growth to just 74,000 that month, according to Bloomberg.

Leading into the jobs report is ADP data on payrolls on Wednesday an ISM manufacturing report today and an ISM non-manufacturing report on Wednesday.

The New Zealand dollar will probably trade between 77 US cents and 82.80 cents this week, according to the BusinessDesk survey of nine traders and strategists. Four expect the currency to advance while two expect a decline and three say it will remain largely unchanged. The kiwi recently bought 81.03 US cents.

Concern about emerging markets may continue to weigh on the local currency as investors favour so-called safe havens such as the Japanese yen.

China publishes data on non-manufacturing PMI today after a report at the weekend showed its official gauge of the manufacturing sector slipped to a five-month low in January, confirming a slowdown in factory activity in the world's second-largest economy.

Markets are closed in China this week for New Year celebrations.

Central banks in Europe and England are expected to keep rates unchanged this week, though the European Central Bank will likely maintain its easing bias after a weaker than expected inflation report on Friday.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Budget Policy Statement: Spending Wins Over Tax Cuts; Big Ticket Items Get Boost

Income tax cuts are on hold as the government says “responding to the earthquakes and reducing debt are currently of higher priority”, although election year tax sweeteners remain possible. More>>

ALSO:

Fishy: Is Whitebaiting Sustainable?

The whitebait fry - considered a delicacy by many - are the juveniles of five species of galaxiid, four of which are considered threatened or declining. The SMC asked freshwater experts for their views on the sustainability of the whitebait fishery and whether we're doing enough to monitor the five species of galaxiid that make up whitebait. More>>

ALSO:

Crown Accounts: Smaller-Than-Expected Four-Month Deficit

The New Zealand government's accounts recorded a smaller-than-forecast deficit in the first four months of the fiscal year on a higher-than-expected inflow of corporate and goods and services tax. More>>

ALSO:

On For Christmas: KiwiRail Ferries Back In Full Operation After Quake

KiwiRail’s Interislander ferries are back in full operation for the first time since the Kaikoura earthquake, with the railspan that allows rail wagons to be loaded on the Aratere now restored. More>>

ALSO:

Comerce Commission Investigation: Prosecutions Over Steel Mesh Labelling

Steel & Tube Holdings, along with two other companies, will be prosecuted by the Commerce Commission following the regulator's investigation into seismic steel mesh, while Fletcher Building's steel division has been given a warning. More>>

ALSO:

Wine: 20% Of Marlborough Storage Tanks Damaged By Quake

An estimated 20 percent of wine storage tanks in the Marlborough region, the country’s largest wine producing area, have been damaged by the impact of the recent Kaikoura earthquake. More>>

ALSO:

ACC: Levy Recommendations For 2017 – 2019 Period

• For car owners, a 13% reduction in the average Motor Vehicle levy • For businesses, a 10% reduction in the average Work levy, and changes to workplace safety incentive products • For employees, due to an increase in claims volumes and costs, a 3% increase in the Earners’ levy. More>>

Get More From Scoop

 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news