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

 


NZ dollar holds above 88 US cts before Yellen, CPI

NZ dollar holds above 88 US cts before Yellen testimony, CPI

By Jonathan Underhill

July 14 (BusinessDesk) - The New Zealand dollar held above 88 US cents as traders weighed the prospects that Federal Reserve chair Janet Yellen will this week say the world's biggest economy needs stimulus for longer, weakening the greenback and driving demand for higher-yielding currencies.

The kiwi traded at 88.14 US cents at 5pm in Wellington, little changed from the start of the day and from the close of trading in New York on Friday. The trade-weighted index was little changed at 81.92, close to its all-time high. The kiwi may test its post-float high of 88.42 US cents this week, according to a BusinessDesk survey.

Yellen is scheduled to deliver her semi-annual policy testimony to the Senate Banking Committee on Tuesday in the US, and the next day to the House Financial Services Committee, having previously indicated the Fed isn't in any rush to start raising interest rates, even while trimming its bond buying programme. If she again signals the Fed won't hurry to raise rates from near zero it may drive investors to currencies such as the kiwi dollar, which offer higher interest rates. New Zealand inflation data this week, meantime, is expected to keep the Reserve Bank on track to hike interest rates this month.

"If Yellen comes out with a comment that implies the first fed funds rate hike might not be until the second half of next year, we'll probably see US dollar weakness and in the hunt for yield, the kiwi may try at that high," said Peter Cavanaugh, client adviser at Bancorp Treasury Services. If New Zealand CPI then prints strongly, "it's like pushing the afterburners."

The Reserve Bank will be uncomfortable with the TWI near record levels, especially with prices of commodity exports having tumbled this year, he said. Still, "there's a hunger for yield because there's so much free cash lying around the world."

Second-quarter inflation figures due on Wednesday are expected to show the consumer price index rose to 0.4 percent in the second quarter for an annual pace of 1.8 percent, according to a Reuters survey. That's closer to the mid-point of the 1 percent-to-3 percent range that the Reserve Bank targets and would keep intact expectations that governor Graeme Wheeler will raise the official cash rate to 3.5 percent this month.

The local currency traded at 64.78 euro cents from 64.73 cents at the start of the day, little changed from the New York close. The kiwi was little changed at 51.50 British pence. The New Zealand dollar was little changed at 93.79 Australian cents and traded at 89.38 yen.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Price Of Cheese: Dairy Product Prices Fall To The Lowest This Year

Dairy product prices fell in the latest GlobalDairyTrade auction, hitting the lowest level in the 2015 auctions so far, as prices for milk powder and butter slid amid concern about the outlook for commodities. More>>

ALSO:

Houston, We Have An Air Route: Air New Zealand To Fly Direct To The Heart Of Texas

Air New Zealand will fly its completely refitted Boeing 777-200 aircraft between Auckland and Houston up to five times a week opening up the state of Texas as well as popular nearby tourist states such as Louisiana and Florida. More>>

ALSO:

Scoop Business: Reserve Bank’s Spencer Calls On Govt To Rethink Housing Tax

The Reserve Bank has urged the government to take another look at a capital gains tax on investment in housing, allow increased high-density development and cut red tape for planning consents to address an over-heated Auckland property market. More>>

ALSO:

The Nation: Call For Cross-Party Auckland Housing Plan

Penny Hulse calls for cross-party accord on Auckland housing because “it’s too important to score political points on”. More>>

ALSO:

Flu Season: Overcoming Vaccination Reluctance

While research shows that 40% of New Zealand businesses offer free or subsidised flu vaccinations to employees this time of year, HR professionals say persuading staff to participate is the biggest challenge. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news