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

 


NZ Dollar Outlook: Kiwi may falter amid conflicting forces

NZ Dollar Outlook: Kiwi may falter as investors mull conflicting forces

By Tina Morrison

June 16 (BusinessDesk) - The New Zealand dollar may falter this week as traders weigh the outlook for higher interest rates as dairy prices come off the boil while economic growth continues to accelerate.

The kiwi will probably trade between 84.90 US cents and 87.50 cents this week, according to a BusinessDesk survey of 10 traders and strategists. Four predict the kiwi will remain largely unchanged, while three expect it to fall and three say it may rise. It recently traded at 86.70 US cents.

Investors are mulling the future track of the kiwi after it spiked higher last week when the Reserve Bank affirmed its commitment to rising interest rates even as bank officials said the currency should decline to reflect softer commodity prices. While Thursday's release of first quarter growth data is likely to feed into sentiment of a strong economy, the fortnightly dairy auction on Wednesday will probably show commodity prices continue to soften. Traders will be eyeing any subtle changes from the Federal Reserve on Thursday as they mull the outlook for rising interest rates in the world's largest economy.

"There's a lot of conflicting forces on the New Zealand dollar at the moment," said Bancorp Treasury Services client advisor Peter Cavanaugh. "The market is still torn. Volatility might be low globally but we have got our own peculiar little issues here."

In New Zealand this week, the GDP data will probably show the economy grew 1.2 percent in the first three months of the year, from a 0.9 percent pace in the fourth quarter of 2013, according to economists polled by Reuters. That would mark the fifth quarter with growth of 1 percent or above in the past six years.

Meantime on Wednesday, the country will probably post a $1.2 billion first quarter current account surplus, from $1.4 billion in the fourth quarter, which could push the annual deficit to 2.8 percent of GDP, the first time it has been below 3 percent since late 2011.

Traders will be eyeing Fonterra Cooperative Group's fortnightly GlobalDairyTrade auction early Wednesday morning which may show prices fell for a ninth straight sale. Dairy prices have fallen 26 percent since February and the decline in commodity prices has been highlighted by the Reserve Bank as a reason the kiwi should be moving down.

On Friday, the latest ANZ-Roy Morgan monthly consumer confidence report is scheduled for release and will be watched for signs of softness falling interest rate rises.

Elsewhere, traders will be eyeing tomorrow's release of the Reserve Bank of Australia's minutes to its last meeting. The bank is probably keeping the Aussie in its sights given it has risen 1.6 percent against the greenback so far this month.

In the US, the Federal Reserve is expected to continue tapering its asset purchases at a steady pace following its latest meeting and traders will be looking for indications of when interest rates may start rising. The US also has data on inflation, industrial production and housing.

The increasing violence in Iraq will also be on the radar this week on concern about future oil supply from OPEC's second largest producer, said Bancorp's Cavanaugh. While it doesn't appear to be a major threat at the moment, it could flare up, he said.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Research: ‘Ageing Well’ Science Challenge Launched

Science and Innovation Minister Steven Joyce today launched the Ageing Well National Science Challenge, confirming initial funding of $14.6 million. More>>

ALSO:

Scoop Business: Govt Resisting Pressure To Pump More Cash Into Solid Energy

Prime Minister John Key says it is “not the government’s preferred option” to make a fresh capital injection into the troubled state-owned coal miner, Solid Energy, but dodged journalists’ questions at his weekly press conference on whether that might prove necessary... More>>

ALSO:

Lagest Ever Privacy Breach Award: NZCU Baywide Accepts “Severe” Censure In Cake Case

NZCU Baywide says that once it was found to have committed a breach of a former staff member’s privacy, it had attempted to resolve the matter... the censure and remedies for its actions taken almost three years ago are “severe” but accepted, and will hopefully draw a line under the matter. More>>

ALSO:

Scoop Business: PayPal Stops Processing Mega Payments; NZX Listing Still On

PayPal has ceased processing payments for Mega, the file storage and encryption firm looking to join the New Zealand stock market via a reverse listing of TRS Investments, amid claims it is not a legitimate cloud storage service. More>>

ALSO:

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:

Get More From Scoop

 
 
Standards New Zealand

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