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

 


NZ Dollar Outlook: Kiwi may rise to new record

NZ Dollar Outlook: Kiwi may rise to record high as local economy seen outperforming US

By Tina Morrison

June 30 (BusinessDesk) - The New Zealand dollar, which touched a three-year high last week, may break through that level this week to reach a record since the currency was allowed to trade freely in March 1985 as investors contrast weaker growth prospects in the US with the outlook for a strong local economy.

The kiwi may trade between 86.40 US cents and 89.90 cents this week, according to a BusinessDesk survey of 10 traders and strategists. Seven predict the kiwi will rise this week, while two pick it to decline and one expects it to remain largely unchanged. It recently traded at 87.75 US cents.

The New Zealand dollar last week touched 87.94 US cents, its highest level since a post-float high of 88.40 cents in August 2011. Seven of 10 surveyed by BusinessDesk expect the kiwi to surpass that level this week to reach a new record as the strength of the New Zealand economy keeps the nation’s interest rates higher, while weaker growth prospects in the US weigh on the greenback.

“The domestic situation has surprised the offshore markets,” said ANZ Bank New Zealand senior foreign exchange strategist Sam Tuck. “The overt hawkishness of the RBNZ at the July meeting and the subsequent move of market pricing in terms of the rates market really hammered home the message overseas that the New Zealand economy is doing very well.”

By contrast, data last week showing the US economy contracted at an annual 2.9 percent rate in the first quarter raised concerns about the pace of growth in the world’s largest economy. Prior to the gross domestic product report, the Federal Reserve cut its projection for 2014 GDP to 2.1 percent to 2.3 percent, from a previous expectation of 2.8 percent to 3 percent.

“It sets a relatively high bar for the US to perform as to the Fed forecast for the rest of the year,” said the ANZ’s Tuck. “When you are contracting that much in the first quarter, your next three quarters have to be very very strong in order to reach targeted growth.”

US data scheduled for release this week includes the Institute for Supply Management manufacturing index on Tuesday and non-manufacturing index on Thursday, and key non-farm payrolls data on Thursday. US markets are closed Friday for the Independence Day holiday.

US data will have to outperform expectations to arrest the US dollar decline, said ANZ’s Tuck. In contrast, traders are cautious about selling the kiwi.

In New Zealand this week, traders will be eyeing Wednesday’s Fonterra Cooperative Group GlobalDairyTrade auction and the ANZ June commodity price index.

Neither Australia’s central bank, which meets on Tuesday, or Europe’s central bank, which meets on Thursday, are expected to change interest rates.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Must Sell 20 Petrol Stations: Z Cleared To Buy Caltex Assets

Z Energy is allowed to buy the Caltex and Challenge! petrol station chains but must sell 19 of its retail sites and one truck-stop, the Commerce Commission has ruled in a split decision that acknowledges possible retail price coordination between fuel retailers occurs in some regions. More>>

ALSO:

Huntly: Genesis Extends Life Of Coal-Fuelled Power Station To 2022

Genesis Energy will keep its two coal and gas-fired units at Huntly Power Station operating until 2022, having previously said they'd be closed by 2018, after wringing a high price from other electricity generators who wanted to keep them as back-up. More>>

ALSO:

Dammed If You Do: Ruataniwha Irrigation Scheme Hits Farmer Uptake Targets

Enough Hawke's Bay farmers have signed up for water from the proposed Ruataniwha Water Storage Scheme for it to go ahead as long as a cornerstone institutional capital investor can be found to back it, its regional council promoter announced. More>>

ALSO:

Reserve Bank: OCR Stays At 2.25%

Reserve Bank governor Graeme Wheeler kept the official cash rate at 2.25 percent, in a decision traders had said could go either way, while predicting inflation will pick up as the slump in oil prices washes out of the data and capacity pressures start to build in the economy. More>>

ALSO:

Export Values Down: NZ Posts Biggest Annual Trade Deficit In 7 Years

New Zealand has recorded its biggest annual trade deficit since April 2009, reflecting weaker prices of agricultural commodities such as dairy products, beef and lamb, and increased imports of vehicles and machinery. More>>

ALSO:

Currency Events: NZ's New $5 Note Wins International Banknote Award

New Zealand’s new Brighter Money $5 note has been named Banknote of the Year in a prestigious international competition. The $5 note was awarded the IBNS Banknote of the Year title at the International Bank Note Society’s annual meeting. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news