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 interest rate hikes loom

NZ Dollar Outlook: Kiwi may gain as interest rate hikes loom

By Tina Morrison

March 10 (BusinessDesk) – The New Zealand dollar may rise in volatile trading this week as investors are lured by better yields ahead of an expected hike in interest rates by the Reserve Bank and the prospect of further increases.

The kiwi may trade between 82.75 US cents and 86.35 cents this week, according to a BusinessDesk survey of 11 traders and strategists. Five expect the currency to advance while four forecast a drop and two expect little change. The kiwi recently traded at 84.65 US cents, from 84.38 cents at 8am.

Reserve Bank governor Graeme Wheeler is expected on Thursday to start on a path of continuing rate increases amid concern that inflation will accelerate as the economy gains momentum. Still, this week’s hike is already priced in to markets and traders will be more focused on the outlook for future rate rises and how concerned the bank is about the elevated local currency.

“It’s priced in but you may still get a spike on the day,” said Tim Kelleher, ASB Bank head of institutional FX sales in New Zealand. “I’m wary about how bearish or hawkish some of the banks are on their rate forecasts.”

The central bank won’t want to hike rates so far as to “crush” the economy and will also be cognisant of the higher currency, Kelleher said.

Governor Wheeler will raise the official cash rate a quarter point to 2.75 percent, according to 15 of 17 economists in a Reuters survey. Of the two outsiders, one expects a 50 basis points rise this week while the other says the bank will likely wait till June to hike.

The Reserve Bank has held the cash rate at a record low 2.5 percent since March 2011, a move similar to most of the world's major central banks seeking to stimulate economic growth after the global financial crisis froze credit markets.

Given the rate hike is widely anticipated, most traders will be focused on the central bank’s forecasts for future rate movements. Economists polled by Reuters expect the benchmark rate will be at 3.75 percent by March next year.

Geopolitical tensions in Ukraine and uncertainty about Chinese growth may weigh on the kiwi this week, traders said.

Also scheduled for release in New Zealand this week are February data on house prices, electronic card spending, food prices and manufacturing.

The Real Estate Institute house price index tomorrow will be watched for signs of weakness after the January data suggested price momentum faltering, perhaps reflecting restrictions on high debt mortgage lending.

Electronic card transaction data is also due tomorrow while the food price index is due Thursday. On Friday, the BNZ-BusinessNZ PMI is expected to show continued strength in manufacturing.

In Australia this week, the February NAB business confidence survey tomorrow may show continued strength after improving the previous two months although the Westpac-MI consumer sentiment survey the following day may decline on concern about the economic outlook and jobs.

Thursday’s Australian employment data may show a bounce in February following weakness while the unemployment rate remains at 6 percent.

Traders will keep an eye on a speech by Reserve Bank of Australia deputy governor Philip Lowe in Sydney on demographics, productivity and innovation on Wednesday night, in a session open to media questions.

Elsewhere this week, the US February retail sales data on Thursday may lift after weakness.

Meanwhile, central banks in Japan, Korea and Indonesia are expected to keep the status quo while Thailand may cut rates by 25 basis points to support the economy amid political turmoil, according to Moody’s Analytics.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Finance: Major Campaign To End "Gross Overtaxation Of Savings"

The campaign – which includes a special web site through which New Zealanders can e-mail their own and other MPs and party leaders – is backed by Age Concern, Consumer NZ, the Financial Services Council and the Taxpayers’ Union. More>>

ALSO:

Scoop Business: Leighton-Led WGP To Build, Manage Transmission Gully

The Wellington Gateway Partnership, led by a unit of ASX-listed Leighton Holdings, has won the $1 billion contract to build the Transmission Gully road north of Wellington. More>>

ALSO:

Gareth Morgan: The Government’s Fresh Water Policy – Revisited

Fresh water quality is the latest area to be in the sights of Gareth Morgan and his research organisation The Morgan Foundation... They found that the fresh water policy was a bit murkier than the Environment Minister let on. More>>

ALSO:

Interest Rates: RBNZ Hikes OCR To 3.5%, ‘Period Of Assessment’ Now Needed

Reserve Bank governor Graeme Wheeler raised the official cash rate as expected, while signalling a pause in rate hikes to assess the impact of moves so far this year. The kiwi dollar sank after Wheeler said its strength was “unjustified” and that the currency could have “a significant fall.” More>>

ALSO:

Fonterra: Canpac Site 'Resize' To Focus More On Paediatrics

Fonterra is looking at realigning its packing operations at Canpac, in the Waikato, to focus more on paediatric nutritionals... The proposed changes could mean around 110 roles may not be required at the site which currently employs 330. More>>

ALSO:

Scoop Business: Postie Plus Brand Gets 2nd Chance With Well-Funded Pepkor

The Postie Plus brand is getting a new lease of life after South Africa’s Pepkor bought the failed retailer’s assets out of administration and said it will use its purchasing power to reduce costs of stock and fatten margins. More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus

Standards New Zealand

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