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

 


Kiwi correction hopes rest with FED reaction

Kiwi correction hopes rest with FED reaction to stronger economic data.


By Garry Dean (Sales Trader, CMC Markets New Zealand)


08:40 NZT, Tuesday 8 July 2014

Kiwi correction hopes rest with FED reaction to stronger economic data.
By Garry Dean (Sales Trader, CMC Markets New Zealand)

The Kiwi is proving extremely resilient amidst all of the noise surrounding last Thursday’s positive jobs report in the US, with the currency failing to break support at 0.8700, and opening this morning at 0.8760. Last week’s US Non-Farm Payrolls showed an increase of 288,000 jobs in June, and a subsequent drop in the US unemployment rate to 6.1%, increasing speculation the FED will look to commence hiking rates in the first half of 2015. The two-year US Treasury yield has risen to a nine month high of 0.52%, and in reaction we have seen the US dollar strengthen, with the US Dollar Index trading near two week highs. The FED’s zero interest rate policy has helped fuel the rally in US equity markets, but it’s interesting to note that some retail investors have left the party early, with stock market mutual funds posting net outflows for the first time this year, to the tune of $1.7 bio.

The prospect of a stronger US Dollar going forward is important for a correction lower in the value of the Kiwi, but FED Chair Janet Yellen has shown a reluctance to withdraw monetary stimulus, and has been prepared to look through evidence recently of an uptick in US inflation pressures. Looking past the weather affected slump in US Q1 GDP, economic data in the US has been consistent with a steadily recovering economy, and this gives weigh to recent comments from some FOMC Members who have called for an earlier increase in US interest rates. The minutes of the FED’s 17-18 June meeting will be released on Wednesday night, and will be viewed with interest.

The Kiwi has failed to push above the 0.8794 high posted on 27 June, and this level is again likely to post significant resistance on the week. Key support is seen at 0.8700 and 0.8662 – the low of 25 June. Economic data domestically is light this week with Q2 Business Confidence released Tuesday, and the June Manufacturing Index and REINZ Housing Index due Thursday. QV property data released yesterday showed house prices rising 8.0% in the year to June, and again provided further evidence of the divergence in this sector, with Auckland and Christchurch prices rising while many other regions saw falls. RBNZ Governor Graeme Wheeler is giving an off-the-record speech at a breakfast in Auckland Tuesday, with Deputy Governor McDermott due to speak on Wednesday.

ends

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Media: Fairfax Moves To Create Modern Newsroom

Fairfax Media New Zealand continues its newsroom transformation this week, with a proposal to further organise its editorial operations into focused, local teams and specialist national topic areas. More>>

ALSO:

Dairy: Fonterra Forecast For 2015/16 Season

Fonterra Co-operative Group Limited has today reduced its forecast Farmgate Milk Price for the 2014/15 season to $4.40 per kgMS. Along with its previously announced forecast dividend range of 20-30 cents per share, the change amounts to a forecast ... More>>

ALSO:

BusinessDesk: SkyCity Lifts Minimum Convention Centre Investment To $430M

SkyCity Entertainment Group, the casino operator, has lifted the minimum it will invest in the Auckland International Convention Centre to $430 million and said total costs including land may be $450 million to $470 million. More>>

Statistics: Drop In Dairy Prices Leads Fall In Exports

Total goods exports fell $240 million (5.5 percent) to $4.2 billion in April 2015 compared with April 2014, Statistics New Zealand said today. More>>

BusinessDesk: APN's NZME Sees Future In Paywalls, Growth In Digital Sales

APN News & Media has touted a single newsroom concept for its NZME unit in New Zealand, similar to what Germany's Die Welt uses, saying an 'integrated sales proposition' is helping it win market share, including ... More>>

Labour Party: Global Milk Prices Now Lowest In 6 Years

The latest fall in the global dairy price has brought it to the lowest level in six years and shows there must be meaningful action in tomorrow’s Budget to diversify the economy, says Labour’s Finance spokesperson Grant Robertson. “Dairy prices ... More>>


BusinessDesk: NZ Inflation Expectations Creep Higher In June Survey

May 19 (BusinessDesk) - New Zealand businesses lifted their expectations for inflation over the next two years, sapping any immediate pressure on the Reserve Bank to cut interest rates, and prompting the kiwi dollar to jump higher. More>>

BusinessDesk: Lower Fuel Costs Drive Down NZ Producer Input, Output Prices

May 19 - Producer input and output prices fell in the first quarter, mainly reflecting lower fuel costs and weakness in prices of meat and dairy products. More>>

Media: Fairfax Media NZ Announces Senior Editorial Team

Fairfax Media New Zealand has today confirmed its new editorial leadership team, as part of a transformation of its newsrooms aimed at enhancing local and national journalism across digital and print. More>>

Science: Flavonoids Reduce Cold And Cough Risk

Flavonoids reduce cold and cough risk Research from the University of Auckland shows eating flavonoids – found in green tea, apples, blueberries, cocoa, red wine and onions – can significantly reduce the risk of catching colds and coughs. The research, ... More>>

BusinessDesk: RBNZ House Alert Speech The Catalyst For Government Action

Prime Minister John Key all but conceded that pressure from the Reserve Bank of New Zealand for concerted action on rampant Auckland house prices was one of the main catalysts for the government's weekend announcements about tightly ... More>>

BusinessDesk: How To Fall Foul Of The New Housing Tax Rules: Tips From IRD

Just because you rented out your investment property doesn't absolve you from paying tax, says the Inland Revenue Department in a summary of commonly made mistakes by non-professional property investors when it comes to their tax liability.More>>

Legal: Superdiversity Law, Policy And Business Stocktake Announced

Mai Chen, Managing Partner at Chen Palmer New Zealand Public and Employment Law Specialists and Adjunct Professor of Law at the University of Auckland, today announced the establishment ... More>>

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news