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

 


NZ dollar sinks further as air crash, Gaza sap risk appetite

NZ dollar sinks further as air crash, Gaza offensive sap risk appetite, RBNZ looms

By Jonathan Underhill

July 18 (BusinessDesk) - The New Zealand dollar extended its slide as the crash of a Malaysian passenger jet in rebel-held Ukraine and a ground offensive in Gaza sapped risk appetite worldwide, although the kiwi’s decline was limited by uncertainty about next week’s Reserve Bank review.

The kiwi fell to 86.75 US cents at 8am in Wellington, from 86.93 cents in late Wellington trading yesterday. The trade-weighted index fell to 80.72 from 80.96.

Shares fell on Wall Street, while gold, US Treasuries and the yen gained, typically a sign that investors looking for safety are trumping those seeking risk after Ukraine said the Malaysian plane was shot down by pro-Russian rebels. Meantime, Israel has begun a ground offensive in Gaza after failing to agree terms to a peace accord with Hamas.

“You would expect the kiwi to remain under pressure,” said Sam Tuck, senior FX strategist at ANZ Bank New Zealand. He sees a range of between 86.30-40 US cents and 87.20 cents in the next 24 hours although the decline may be limited by a lack of fresh economic data.

Stronger job advertisements in ANZ’s survey and a pick-up in consumer confidence “is a reminder that the New Zealand economy overall is solid,” Tuck said.

Traders are cautious of the Reserve Bank in case it gives a more hawkish account in next week’s interest rate review, where governor Graeme Wheeler is expected to raise the official cash rate a quarter point to 3.5 percent.

“They’re wary of selling something with a positive carry” ahead of the RBNZ’s July 24 statement, Tuck said. Once that is out of the way there was a prospect that the kiwi could weaken in line with commodity prices.

AMP Capital New Zealand, which manages more than $18 billion of assets, said yesterday it was underweight the New Zealand dollar even while holding more cash than the size of its portfolios would suggest.

Adding to the mix of forces driving world markets, the Philadelphia Federal Reserve's Business Outlook Survey, a measure of regional manufacturing activity in the US, rose to the highest level in more than three years, surprising economists, while weekly initial jobless claims came in lower than expected.

James Bullard, president of the St. Louis Federal Reserve said the Fed may have to raise interest rates more quickly “if macroeconomic conditions continue to improve at the current pace.”

The kiwi fell to 64.04 euro cents from 64.25 cents yesterday and dropped to 87.68 yen from 88.20 yen. It traded at 50.68 British pence from 50.70 pence and decreased to 92.65 Australian cents from 92.78 cents.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Wood Producers: Crisis In New Zealand Log Supply

New Zealand wood processing leaders held a hui with senior government officials and political leaders in Whangarei yesterday to assess the acute log supply shortage to local mills in Northland. More>>

Consents And Taxes: Trustpower 'Very Disappointed' With Judgement

Trustpower is "very disappointed" with a Supreme Court ruling dismissing its bid to claim tax deductions on $17.7 million of project costs in a case closely watched by large-scale infrastructure developers. More>>

ALSO:

Fruitful Endeavours: Kiwifruit Exports Reach Record Levels

In June 2016, kiwifruit exports rose $105 million (47 percent) from June 2015 to reach $331 million, Statistics New Zealand said today. Overall, goods exports rose $109 million (2.6 percent) in June 2016 (to $4.3 billion). More>>

ALSO:

Economic Update: RBNZ Says Rate Cut Seems Likely

The Reserve Bank will likely cut interest rates further as a persistently strong kiwi dollar makes it difficult for the bank to meet its inflation target, it said. The local currency fell. More>>

ALSO:

House Price Action Plan: RBNZ Signals National Lending Restrictions

The central bank wants to cap bank lending to property investors with a deposit of less than 40 percent at 5 percent and restore the 10 percent limit for owner-occupiers wanting to take out a mortgage with a deposit of less than 20 percent, according to a consultation paper released today. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news