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

 

Trade Plans: Prime Minister's Speech To International Business Forum

"The work to improve public services, build infrastructure, and solve social problems is possible only because we have enjoyed sustained, solid economic growth. A big reason for that is the Government’s consistent agenda of economic reform, and our determination to open up more opportunities for trade with the world." More>>

ALSO:

Media: TVNZ Flags Job Cuts To Arrest Profit Decline

Chief executive Kevin Kenrick said the changes were aimed at creating "a sustainable future video content business for TVNZ in an ever-changing media market." More>>

ALSO:

Reserve Bank: Wheeler Keeps OCR At 1.75%

Reserve Bank governor Graeme Wheeler kept the official cash rate unchanged at 1.75 percent, as expected, and reiterated his view that the benchmark rate doesn't need shifting for the foreseeable future. More>>

ALSO:

Retail: Pumpkin Patch Brand, IP Sold To Catch Group

The receivers of failed children's clothing retailer Pumpkin Patch have confirmed that the company's brand and intellectual property have been sold to Australian online retailer Catch Group. More>>

ALSO:

Oil: 2017 Block Offer Petroleum Tender Launched

New Zealand is well-placed to take advantage of the economic benefits of oil and gas exploration, Energy and Resources Minister Judith Collins announced today at the launch of the 2017 Block Offer petroleum tender. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news