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

 

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