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

 

Real Estate: Housing Prices Head South In Most Of NZ

Housing became more affordable for first home buyers in many parts of the country including Auckland last month, as falling prices more than offset rising mortgage interest rates. More>>

ALSO:

Cosmetics & Pollution: Proposal To Ban Microbeads

Cosmetic products containing microbeads will be banned under a proposal announced by the Minister for the Environment today. Marine scientists have been advocating for a ban on the microplastics, which have been found to quickly enter waterways and harm marine life. More>>

ALSO:

NIWA: 2016 New Zealand’s Warmest Year On Record

Annual temperatures were above average (0.51°C to 1.20°C above the annual average) throughout the country, with very few locations observing near average temperatures (within 0.5°C of the annual average) or lower. The year 2016 was the warmest on record for New Zealand, based on NIWA’s seven-station series which begins in 1909. More>>

ALSO:

Farewell 2016: NZ Economy Flies Through 2016's Political Curveballs

Dec. 23 (BusinessDesk) - New Zealand's economy batted away some curly political curveballs of 2016 to end the year on a high note, with its twin planks of a booming construction sector and rampant tourism soon to be joined by a resurgent dairy industry. More>>

ALSO:

NZ Economy: More Growth Than Expected In 3rd Qtr

Dec. 22 (BusinessDesk) - New Zealand's economy grew at a faster pace than expected in the September quarter as a booming construction sector continued to underpin activity, spilling over into related building services, and was bolstered by tourism and transport ... More>>

  • NZ Govt - Solid growth for NZ despite fragile world economy
  • NZ Council of Trade Unions - Government needs to ensure economy raises living standards
  • KiwiRail Goes Deisel: Cans electric trains on partially electrified North Island trunkline

    Dec. 21 (BusinessDesk) – KiwiRail, the state-owned rail and freight operator, said a small fleet of electric trains on New Zealand’s North Island would be phased out over the next two years and replaced with diesel locomotives. More>>

  • KiwiRail - KiwiRail announces fleet decision on North Island line
  • Greens - Ditching electric trains massive step backwards
  • Labour - Bill English turns ‘Think Big’ into ‘Think Backwards’
  • First Union - Train drivers condemn KiwiRail’s return to “dirty diesel”
  • NZ First - KiwiRail Going Backwards for Xmas
  • Get More From Scoop

     
     
     
     
     
     
     
     
    Business
    Search Scoop  
     
     
    Powered by Vodafone
    NZ independent news