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

 


Break below 0.8500 significant for Kiwi

Break below 0.8500 significant for Kiwi


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

Last week’s break below the key 0.8500 – 0.8515 support window was significant for the Kiwi, and this level is now expected to provide major topside resistance going forward. Monthly charts show a bearish key reversal in May, and we open below the 100-day moving average to start the week. While short-term support is seen at 0.8437 and 0.8405, the break below 0.8500 suggests downward momentum is building, and short-term strength is likely to encounter further selling back towards this level.

Last week’s massive slump in NZ business confidence followed on from a 4.4% slide in consumer confidence, and provided the impetus for the decline in the Kiwi. The Fonterra pay-out revision to $8.40 this season was largely expected, with the $7.00 starting point for next season reflecting the 23% fall we have seen in the past seven GlobalDairyTrade auctions. This is forecast to reduce farmer incomes by around $2.6 bio, and take around 1% off our annual GDP. No doubt this will be a major consideration for the RBNZ in the lead-up to the 12 June Monetary Policy Statement, with their economic projections and inflation forecasts both likely to be revised lower.

The NZD/AUD cross fell over 1% last week as the AUD surged on a sharp increase in business investment spending estimates for next year. The cross fell to a low of 0.9105, and revisited its 200-day moving average for the first time since mid-March last year. The RBA meet today, and with a tight fiscal budget, a slump in consumer confidence and a sharp decline in building approvals recently, they are likely to adopt a more dovish stance. The RBNZ however are still expected to hike rates a further 25pts in June, albeit with a likely reduction in the trail of rates going forward, and this widening interest differential should help support the cross. Indeed in an environment where central banks of developed nations remain focussed on keeping rates close to zero (the ECB are expected to cut again on Thursday night), the reaction to a further rate hike on 12 June by the RBNZ from foreign investors in search of yield will be a key theme in the second half of this month.

ends

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Revenue Renewal: Tax Modernisation Programme Launched

Revenue Minister Todd McClay today released the first two in a series of public consultations designed to modernise and simplify the tax system. More>>

ALSO:

Scoop Business:
NZ Puts Seven New Oil And Gas Areas Put Up For Tender

A total of seven new areas will be opened up to oil and gas exploration under its block offer tendering system, as the New Zealand government seeks to concentrate activity in a few strategically chosen areas. More>>

ALSO:

Half Full: Dairy Payouts Steady, Cash Will Be Tight

Industry body DairyNZ is advising farmers to focus on strong cashflow management as they look ahead to the 2015-16 season following Fonterra's half-year results announcement today. More>>

ALSO:

First Union: Cotton On Plans To Use “Tea Break” Law

“The Prime Minister reassured New Zealanders that ‘post the passing of this law, will you all of a sudden find thousands of workers who are denied having a tea break? The answer is absolutely not’... Cotton On is proposing to remove tea and meal breaks for workers in its safety sensitive distribution centre. How long before other major chains try and follow suit?” More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news