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

 

Housing Policy: Auckland Densification As Popular As Ebola, English Says

Finance Minister Bill English said calls by the Reserve Bank Governor for more densification in Auckland’s housing were “about as popular in parts of Auckland as Ebola” would be. More>>

ALSO:

Crown Accounts: NZ Government Deficit Smaller Than Expected In First Half

The New Zealand government's operating deficit was smaller than expected in the first six months of the financial year, as the consumption and corporate tax take rose ahead of forecast in December, having lagged estimates in previous months. More>>

ALSO:

Fruit & Veg Crackdown: Auckland Fruit Fly Find Under Investigation

The Ministry for Primary Industries (MPI) is investigating a find of a single male Queensland fruit fly in a surveillance trap in the Auckland suburb of Grey Lynn... MPI has placed legal controls on the movement of fruit and some vegetables outside of a defined circular area which extends 1.5km from where the fly was trapped in Grey Lynn. More>>

ALSO:

Scoop Business: Westpac NZ Reaches $2.97M Swaps Settlement

Westpac Banking Corp’s New Zealand unit has agreed to pay $2.97 million in a settlement with the Commerce Commission over the way the bank sold interest rate swaps to farmers between 2005 and 2012. More>>

ALSO:

Going Dutch: Fonterra Kicks Off $144M Partnership With Dutch Cheese Maker

Fonterra Co-operative Group, the world’s largest dairy exporter, has commissioned a new dairy ingredients plant in Heerenveen, in the north of the Netherlands, its first wholly-owned and operated ingredients plant in Europe. More>>

ALSO:

Scoop Business: NZ Retail Sales Beat Estimates

New Zealand retail sales rose more than expected in the fourth quarter, led by vehicle-related transactions, food and beverages, adding to evidence that cheap credit and a growing jobs market are encouraging consumers to spend. More>>

ALSO:

Delivery Cuts Go Ahead: 'Government Money Grab' From NZ Post

"It's a money grab by the Government as the shareholder of New Zealand Post" says Postal Workers Union advocate Graeme Clarke about the changes announced by NZ Post. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news