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

 


NZ dollar rallies as investors chase yield after ECB rate cu

NZ dollar rallies as investors chase yield after ECB rate cut; US jobs data looms

By Paul McBeth

June 6 (BusinessDesk) - The New Zealand dollar rose as investors sought bigger returns after the European Central Bank cut its key deposit rate into negative territory, and ahead of US employment figures.

The kiwi traded at 84.86 US cents at 5pm in Wellington from 84.99 cents at 8am, up from 84.41 cents yesterday. The trade-weighted index advanced to 79.11 from 78.90 yesterday. The local currency was little changed on the week, from 84.97 US cents last Friday in New York and 79.19 on the TWI.

The ECB became the first major central bank to charge fees on deposits and unveiled a 400 billion euro stimulus plan to support an economy threatened by deflation. That prompted investors to seek higher yields elsewhere, stoking demand for risk-sensitive currencies such as the Australian and New Zealand dollars.

"It's another major economy with zero or negative rates, and that caused a surge for yield elsewhere," said Michael Johnston, senior trader at HiFX in Auckland. "We're range-trading with a downside bias - we'll nudge lower but we'll have periods of strength."

Next week's Reserve Bank of New Zealand policy review will remind investors local interest rates are rising, with governor Graeme Wheeler expected to hike the official cash rate a third time to 3.25 percent. Still, recent declines in dairy prices will put the forecast track for the key rate under scrutiny to see whether the central bank slows down its anticipated tightening.

The ECB decision comes ahead of the May US non-farm payrolls release in Washington, which may come in weaker than previously anticipated after a private payrolls report disappointed investors earlier this week.

HiFX's Johnston said the kiwi should come under pressure in the medium term as the US economy recovers, and investors regain confidence in the greenback.

The local currency edged up to 62.14 euro cents from 62.05 cents yesterday, and was little changed at 50.48 British pence from 50.39 pence. It was unchanged at 90.90 Australian cents from a day earlier, and gained to 86.81 yen from 86.53 yen.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Warming: Warming Signs From State Of Climate Report

Climate data from air, land, sea and ice in 2013 'reflect trends of a warming planet' -- says the latest State of the Climate report, launched by U.S. and New Zealand scientists. More>>

ALSO:

Scoop Business: Embrace Falling Home Affordability, Says NZIER

Despair over the inability to afford a house is misplaced and should be embraced as an opportunity to invest in more wealth-creating activity, says the principal economist at the New Zealand Institute of Economic Research, Shamubeel Eaqub. More>>

Productivity Commission: NZ Regulation Not Keeping Pace

New Zealand regulators often have to work with out-of-date legislation, quality checks are under strain, and regulatory workers need better training and development. More>>

ALSO:

Callaghan Innovation: Investment To Help Deepen Innovation Reporting

Callaghan Innovation, the government’s high tech HQ for Kiwi business, is to help deepen New Zealand media coverage of the commercialisation of innovation through an arms-length partnership with independent business news service BusinessDesk. More>>

ALSO:

Tax Credits, Grants: Greens $1Bn R&D Plan

In the Party’s headline economic announcement, the Greens have launched their plan to build a smarter, more innovative economy which has as its centrepiece an additional $1 billion of government investment in research and development (R&D) above current spend, including tax breaks for business. More>>

ALSO:

Inflation: CPI Increases 0.3 Percent In June Quarter

The consumers price index (CPI) rose 0.3 percent in the June 2014 quarter, Statistics New Zealand said today. This follows rises of 0.3 percent the March quarter and 0.1 percent in the December 2013 quarter. More>>

ALSO:

Half Empty: Dairy Product Prices Drop To Lowest Since December 2012

Dairy product prices fell to the lowest level since December 2012 in the latest GlobalDairyTrade auction, paced by whole milk powder and anhydrous milk fat. More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus

Standards New Zealand

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