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.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Internet: NZ Govt Lifts Target Speeds For Rural Broadband

The government has lifted its expectations on faster broadband speeds for rural New Zealand as it targets increased spending on research and development in the country's information and communications technology sector, which it sees as a key driver for export growth. More>>


Banks: Westpac Keeps Core Government Transactions Contract

The local arm of Westpac Banking Corp has kept its contract with the New Zealand government to provide core transactions, but will have to share peripheral services with its rivals. More>>


Science Investment Plan: Universities Welcome Statement

Universities New Zealand has welcomed the National Statement of Science Investment released by the Government today... this is a critical document as it sets out the Government’s ten-year strategic direction that will guide future investment in New Zealand’s science system. More>>


Scouring: Cavalier Merger Would Extract 'Monopoly Rents' - Godfrey Hirst

A merger of Cavalier Wool Holdings and New Zealand Wool Services International's two wool scouring operations would create a monopoly, says carpet maker Godfrey Hirst. The Commerce Commission on Friday released its second draft determination on the merger, maintaining its view that the public benefits would outweigh the loss of competition. More>>


Scoop Review Of Books: She Means Business

As Foreman says in her conclusion, this is a business book. It opens with a brief biographical section followed by a collection of interesting tips for entrepreneurs... More>>


Hourly Wage Gap Grows: Gender Pay Gap Still Fixed At Fourteen Percent

“The totally unchanged pay gap is a slap in the face for women, families and the economy,” says Coalition spokesperson, Angela McLeod. Even worse, Māori and Pacific women face an outrageous pay gap of 28% and 33% when compared with the pay packets of Pākehā men. More>>


Get More From Scoop

Search Scoop  
Powered by Vodafone
NZ independent news