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

 

Inequality: Top 10% Of Housholds Have Half Of Total Net Worth

The average New Zealand household was worth $289,000 in the year to June 2015, Statistics New Zealand said today. However wealth was not evenly distributed, with the top 10 percent accounting for around half of total wealth. In contrast, the bottom 40 percent held 3 percent of total wealth. More>>

ALSO:

What Winter? Temperature Records Set For June 20-22

The days around the winter soltice produced a number of notably warm tempertaures. More>>

Conservation Deal: New Kākāpō Recovery Partnership Welcomed

Conservation Minister Maggie Barry says the new kakapo recovery partnership between DOC and Meridian Energy is great news for efforts to save one of New Zealand’s most beloved birds. More>>

ALSO:

Tech Sector Report: Joyce Warns Asian Tech Investors View NZ As Hobbits And Food

Speaking in Wellington at the launch of a report showcasing the value of the technology sector to the New Zealand economy, Joyce said more had to be done to tell the country's technology stories overseas. More>>

ALSO:

Mediaglommeration: APN Gets OIO Approval For Demerger Plan

APN News & Media has received Overseas Investment Office approval for its plan to split out its NZME unit ahead of a potential merger with rival Fairfax Media's New Zealand operations. More>>

New Paper: Ninety-Day Trial Period Has No Impact On Firms' Hiring

The introduction of a 90-day trial period has had no impact on hiring by New Zealand companies although they are now in widespread use, according to researchers at Motu Economic and Public Policy Research. More>>

ALSO:

Corrections: Serco Exits Equity Stake, Remains As Operator

Serco has sold its equity stake in the company that holds the contract to design, build and run Wiri Prison in South Auckland but continues as sub-contractor to operate the facility. More>>

GDP: NZ Economy Grows Faster-Than-Forecast 0.7%

New Zealand's economy grew at a faster pace than expected in the first quarter of 2016 as construction expanded at the quickest rate in two years. The kiwi dollar jumped after the data was released. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news