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

 


NZ Dollar Outlook: Kiwi may fall as Ukraine tensions weighed

NZ Dollar Outlook: Kiwi may decline as investors retreat to safety amid heightened Ukraine tensions

By Tina Morrison

April 28 (BusinessDesk) – The New Zealand dollar may decline this week as risk-averse investors favour so-called safe haven currencies on concern about escalating tensions between Western countries and Russia over control of Ukraine.

The local currency may trade between 84.35 US cents and 87 cents this week, according to a BusinessDesk survey of nine traders and strategists. Six predict the kiwi will fall this week, while two pick it to remain largely unchanged and one expects a rise. It recently traded at 85.80 US cents.

Investors are wary about rising geopolitical tensions over Ukraine, with reports the US and the European Union are preparing to impose new sanctions on Russia as early as today on concern about its attempts to destabilise the eastern region of its neighbour. An accord designed to ease tensions, which was signed earlier this month by Ukraine, Russia, the US and the European Union is reported to be on the brink of collapse.

“The world seems to be going into a risk aversion phase, worried about what is happening in the Ukraine,” said Bancorp Treasury client adviser Peter Cavanaugh. “It has put the NZD/USD under a bit of a cloud, the threat is a break lower on risk aversion or safe haven moves should the situation in Ukraine escalate.“

In times of uncertainty, investors retreat to safe haven currencies such as the Japanese yen, the Swiss franc and the US dollar over higher risk investments such as the New Zealand dollar.

Bancorp’s Cavanaugh said currency markets may be more volatile toward the end of the week following the US central bank meeting and as investors mull the latest data for signs of recovery in the world’s largest economy beyond a bounce back from a winter slowdown.

Traders are expecting the Federal Reserve to continue tapering its monetary stimulus programme by US$10 billion a month, reducing it to US$45 billion following a two-day meeting which starts tomorrow. Investors are hoping for even more assurances that the central bank will keep interest rates near record lows for longer.

A reduction in stimulus should provide support for the greenback and weigh on the kiwi, Bancorp said.

While Fed Chair Janet Yellen is not scheduled to give a press conference after the decision is announced early Thursday morning New Zealand time, she is scheduled later to speak to the Independent Community Bankers of America, in Washington.

Also this week, the US publishes its initial tally of first-quarter gross domestic product, which may show growth slowed from the fourth quarter because of the impact of severe winter weather. A report on Friday may show US payroll growth accelerated in April as employers added 215,000 workers, the most since November, according to Bloomberg.

In New Zealand this week, economists expect March data on the merchandise trade balance tomorrow to show continued strength, while on Wednesday building consents are picked to continue their upward trend.

The Reserve Bank publishes data tomorrow which is expected to show the share of high-debt lending remained below its 10 percent cap while private sector credit figures on Wednesday may show whether borrowers have continued to move to fixed-rate mortgages from floating rates since the bank hiked rates.

Meantime, the ANZ Bank’s latest gauge of New Zealand business confidence is published on Wednesday while its commodity price index is scheduled for release on Friday.

Elsewhere, the UK’s first quarter GDP data on Tuesday may show growth accelerated from the fourth quarter, while in Europe traders will be eyeing European inflation data on Wednesday as any further softness may increase pressure on the European Central Bank to add more stimulus.

The Bank of Japan meets on Wednesday, but unlike the Fed, is not expected to scale back its economic stimulus as it continues to try to nurture a fragile economic recovery, Bancorp said.

In Asia, many centres will shut on Thursday for a Labour Day public holiday while Japan will be closed on Tuesday.

(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