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.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Trade: NZ Trade Deficit Widens To A Record In September

Oct. 27 (BusinessDesk) - New Zealand's monthly trade deficit widened to a record in September as meat exports dropped to their lowest level in more than three years. More>>


Animal Welfare: Cruel Practices Condemned By DairyNZ Chief

DairyNZ chief executive Tim Mackle says cruel and illegal practices are not in any way condoned or accepted by the industry as part of dairy farming.

Tim says the video released today by Farmwatch shows some footage of transport companies and their workers, as well as some unacceptable behaviour by farmers of dragging calves. More>>


Postnatal Depression: 'The Thief That Steals Motherhood' - Alison McCulloch

Post-natal depression is a sly and cruel illness, described by one expert as ‘the thief that steals motherhood’, it creeps up on its victims, hiding behind the stress and exhaustion of being a new parent, catching many women unaware and unprepared. More>>


DIY: Kiwi Ingenuity And Masking Tape Saves Chick

Kiwi ingenuity and masking tape has saved a Kiwi chick after its egg was badly damaged endangering the chick's life. The egg was delivered to Kiwi Encounter at Rainbow Springs in Rotorua 14 days ago by a DOC worker with a large hole in its shell and against all odds has just successfully hatched. More>>


International Trade: Key To Lead Mission To India; ASEAN FTA Review Announced

Prime Minister John Key will lead a trade delegation to India next week, saying the pursuit of a free trade agreement with the protectionist giant is "the primary reason we're going" but playing down the likelihood of early progress. More>>



MYOB: Digital Signatures Go Live

From today, Inland Revenue will begin accepting “digital signatures”, saving businesses and their accountants a huge amount of administration time and further reducing the need for pen and paper in the workplace. More>>

Oil Searches: Norway's Statoil Quits Reinga Basin

Statoil, the Norwegian state-owned oil company, has given up oil and gas exploration in Northland's Reinga Basin, saying the probably of a find was 'too low'. More>>


Modern Living: Auckland Development Blowouts Reminiscent Of Run Up To GFC

The collapse of property developments in Auckland is "almost groundhog day" to the run-up of the global financial crisis in 2007/2008 as banks refuse to fund projects due to blowouts in construction and labour costs, says John Kensington, the author of KPMG's Financial Institutions Performance Survey. More>>


Get More From Scoop

Search Scoop  
Powered by Vodafone
NZ independent news