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

 

Scoop Business: NZ Dollar Catches Breath After "Goldilocks" Slump

The New Zealand dollar edged up following its dramatic slump yesterday after the Reserve Bank confirmed speculation it intervened in the currency market last month and PM John Key suggested a “Goldilocks” level far lower than at present. More>>

ALSO:

Biosecurity: Kiwifruit Claim To Hold Officials Accountable For Psa

Kiwifruit growers have joined forces to hold Biosecurity NZ accountable in the courts for its negligence in allowing 2010’s Psa outbreak that devastated New Zealand’s kiwifruit industry and exports. Foundation claimants representing well ... More>>

ALSO:

Poison: Anglers Advised Not To Eat Trout In 1080 Areas

With the fishing season opening in just a few days (1 October 2014), anglers are being warned by the Department of Conservation(DOC) not to eat trout from pristine backcountry waters and their downstream catchments, where the department is conducting 1080 poisoning operations. More>>.

ALSO:

Quotas: MPI Swoop On Suspected Fraudulent Fishing Activity

Ministry for Primary Industries (MPI) compliance officers swooped on a Hawkes Bay fishing enterprise today to secure evidence in an investigation into suspected fraudulent activity... “The investigation involves activity throughout the commercial supply chain – catching, landing, processing and exporting.” More>>

ALSO:

Scoop Business: Fonterra Slashes 2015 Milk Payout, Earnings Tumble 76%

Fonterra Cooperative Group cut its forecast 2015 milk price payout by about 12 percent, citing weaker global dairy prices and said there is a risk of further declines given strong global milk production. More>>

ALSO:

Scoop Business: RBNZ Keeps OCR At 3.5%, Signals Slower Pace Of Future Hikes

Reserve Bank governor Graeme Wheeler kept the official cash rate at 3.5 percent and signalled he won’t be as aggressive with future rate hikes as previously thought as inflation remains tamer than expected. The kiwi dollar fell to a seven-month low. More>>

ALSO:

Weather: Dry Spells Take Hold In South Island

Many areas in the South Island are tracking towards record dry spells as relatively warm, dry weather that began in mid-August continues... for some South Island places, the current period of fine weather is quite rare. More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus

Standards New Zealand

Standards New Zealand

Mosh Social Media
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news