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

 


Headwinds remain for the NZ dollar

Headwinds remain for the NZ dollar


By Garry Dean (Sales Trader, CMC Markets New Zealand)

The New Zealand dollar has benefitted overnight from a rally in risk assets as the weekend’s Crimea referendum passed without major violence. The 97% vote in favour of joining Russia was not recognised by the US, Ukraine and the EU. However the sanctions they imposed following the result were very modest. This saw an unwind of defensive plays, with equities posting strong gains, treasuries weakening, and the safe-haven Yen giving up some recent gains. Against this backdrop the NZD has rallied overnight to a high of 0.8583, and retested major trend-line resistance from the 0.8845 high seen in July 2011.

We saw the NZD break 0.8600 briefly last Thursday, (with a new post-float high reached in the Trade Weighted Index) in reaction to the RBNZ 0.25% OCR hike and prospects for at least another 1% increase this year. With other major central banks continuing with near zero interest rates, the widening interest differential is clearly supportive for the NZD. That said, investors have seen the headwinds created by the geopolitical tensions in Ukraine, and this has the potential to be a concern for some time. Continued weakness in Chinese data is also clearly a concern for both the AUD and the NZD going forward, as is the prospect that FED chairman Janet Yellen will proceed with a reduction in the FED’s monthly bond buying programme. Thursday’s FOMC meeting will be the first led by Yellen since succeeding Ben Bernanke last month, and she is likely to reduce monthly bond purchases by a further $10 bio to $55 bio a month. These factors should provide continued resistance in the 0.8580 -0.8600 window, and one would need to see a weekly close above this window before becoming too positive on future gains. Short-term support is seen at 0.8525 and 0.8505.

Local NZ economic data this week includes Q4 Current Account on Wednesday and Q4 GDP on Thursday. The current account deficit is expected to show a decline to $1.4 bio, or 3.3% of GDP, with Q4 GDP expected to have increased 0.9%. The release of the March RBA minutes today will also be of interest, particularly given the strength in the February employment numbers seen last week.
Ends

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Restrictions Lifted: No Further Tau Flies Found

The Ministry for Primary Industries (MPI) confirms that all restrictions on the movement of fruit and vegetables in Manurewa, Auckland, due to the Tau fly, have been lifted as of 2.26pm on Sunday 7 February. More>>

Crowdfinding: Awaroa Beach To Become Public Land If Appeal Succeeds

Conservation Minister Maggie Barry says a privately-owned beach will become part of the Abel Tasman National Park if an online crowdfunding campaign to buy it succeeds... More>>

ALSO:

Meat Workers Union: Waitangi Mondayisation Flaunted By Large Employer Of Maori

At the AFFCO Talley owned meat plant in Rangiuru, the company has resorted to bullying and threats... saying they could be disciplined and their union sued for an unlawful strike if workers exercise their rights to a paid day off tomorrow. More>>

Earlier:

ETS Review: Modelling Documents Released

Three technical documents are being released to help New Zealanders engage with the Emissions Trading Scheme (ETS) review, Climate Change Minister Paula Bennett says. More>>

ALSO:

Northland: Govt Plan Targets Transport, Web, Maori Assets

The government has released a 10-year plan to attract investors and lift economic growth in Northland, a region that perennially underperforms the rest of the country even while being endowed with natural beauty, productive land, minerals, a potential workforce, scope for manufacturing, forestry and aquaculture, and proximity to Auckland. More>>

ALSO:

Statistics: Unemployment Rate Falls To 5.3 Percent

The unemployment rate fell to 5.3 percent in the December 2015 quarter (from 6.0 percent), Statistics New Zealand said today. This is the lowest unemployment rate since March 2009. There were 16,000 fewer people unemployed than in the September ... More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news