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

 


NZ Dollar Outlook: Kiwi hovers above key support level

NZ Dollar Outlook: Kiwi hovers above key support level as dairy auction, jobs data awaited

By Tina Morrison

Aug. 4 (BusinessDesk) - The New Zealand dollar is trading near a key support level as investors await the latest dairy auction and second-quarter jobs data, after the currency's decline over the past month.

The kiwi will probably trade between 84 US cents and 86.05 cents this week, according to a BusinessDesk survey of eight traders and strategists. Four predict the kiwi will remain largely unchanged this week, while four expect it may gain. It recently traded at 85.10 US cents.

The New Zealand dollar has shed about 3 percent since the start of July, weighed down by weaker commodity prices, the outlook for reduced payments to dairy farmers, a pause in future interest rate hikes and speculation the Reserve Bank may intervene in the market after governor Graeme Wheeler called the currency's strength "unjustified". Still, the local currency is resisting breaking through its 200-day moving average of 84.50 US cents and there is limited data to test that level this week, strategists said.

"It has fallen quite a bit and it has held that very big technical level," said Tim Kelleher, ASB Bank head of institutional foreign exchange sales in New Zealand. "A lot of people watch that. It would need to get below 84 cents for it to carry on at the moment."

The kiwi was pushed lower last week by better than expected US gross domestic product but regained some ground after US employment figures disappointed.

This week, all eyes will be on Fonterra Cooperative Group's fortnightly GlobalDairyTrade auction early Wednesday morning, after prices of dairy products reached the lowest level since December 2012 in the last auction.

"That will be the big one for us and who knows where it's going to print because it has been so volatile," said the ASB's Kelleher. "If it's a bad number again the kiwi will go lower, if it's not we might see a bit of a squeeze back towards 86 cents. That's the risk, on the week, that we just see a little bit of a squeeze back up again."

Employment data scheduled for release Wednesday morning is unlikely to be as market moving, Kelleher said. The second quarter unemployment rate is expected to fall to 5.8 percent from 6 percent in the first quarter, while employment is picked to expand 0.7 percent as jobs growth is met from rising labour force participation amid subdued wage inflation, according to a Reuters poll of economists.

Meanwhile, Finance Minister Bill English is speaking to CEO Forums in Melbourne and Sydney this week, as well as to the Australia New Zealand School of Government Conference in Canberra. On Friday, he speaks to the Waikato Chamber of Commerce in Hamilton.

In Australia, the Reserve Bank is expected tomorrow to hold its benchmark interest rate at 2.5 percent and retain its neutral policy stance. On Friday the bank will release its latest Statement on Monetary Policy, including updated growth and inflation forecasts. Australia's trade deficit could widen further tomorrow with steady jobs data expected on Thursday.

In China, trade data scheduled for release on Friday will be watched for signs of further stabilisation in Asia's largest economy.

Elsewhere, interest rates are expected to remain on hold at the European Central Bank and the Bank of England on Thursday and the Bank of Japan on Friday. Given low inflation in Europe, traders will be watching for any signals for further stimulus from ECB president Mario Draghi's press conference.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Scoop Business: PayPal Stops Processing Mega Payments; NZX Listing Still On

PayPal has ceased processing payments for Mega, the file storage and encryption firm looking to join the New Zealand stock market via a reverse listing of TRS Investments, amid claims it is not a legitimate cloud storage service. More>>

ALSO:

Housing Policy: Auckland Densification As Popular As Ebola, English Says

Finance Minister Bill English said calls by the Reserve Bank Governor for more densification in Auckland’s housing were “about as popular in parts of Auckland as Ebola” would be. More>>

ALSO:

Crown Accounts: NZ Government Deficit Smaller Than Expected In First Half

The New Zealand government's operating deficit was smaller than expected in the first six months of the financial year, as the consumption and corporate tax take rose ahead of forecast in December, having lagged estimates in previous months. More>>

ALSO:

Fruit & Veg Crackdown: Auckland Fruit Fly Find Under Investigation

The Ministry for Primary Industries (MPI) is investigating a find of a single male Queensland fruit fly in a surveillance trap in the Auckland suburb of Grey Lynn... MPI has placed legal controls on the movement of fruit and some vegetables outside of a defined circular area which extends 1.5km from where the fly was trapped in Grey Lynn. More>>

ALSO:

Scoop Business: Westpac NZ Reaches $2.97M Swaps Settlement

Westpac Banking Corp’s New Zealand unit has agreed to pay $2.97 million in a settlement with the Commerce Commission over the way the bank sold interest rate swaps to farmers between 2005 and 2012. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news