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

 

Statistics: Dairy And Travel Still Our Largest Export Earners

New Zealand earned $2.3 billion more from exports than we spent on imports during the year ended June 2015... total exports of goods and services were $67.5 billion, while total imports were $65.1 billion. More>>

ALSO:

Approval: Air New Zealand And Air China Launch New Alliance Route

Air New Zealand and Air China have today launched joint sales for a new daily direct service between Auckland and Beijing after receiving approval from New Zealand Minister of Transport Hon Simon Bridges to form a strategic alliance. More>>

ALSO:

Money Trading: FX Trader Jin Yuan Finance Warned Over Lack Of Monitoring

Jin Yuan Finance, an Auckland-based foreign exchange trader, has been warned over its lack of anti-money laundering processes in place in the first public notification by the Department of Internal Affairs. More>>

ALSO:

Auckland Surge, Possible Peak: House Values Accelerate At Fastest Annual Pace In 8 Years

New Zealand residential property values rose at their fastest annual pace in eight years in August, pushed higher by overflowing demand in Auckland, which is showing signs speculators think it has reached its peak, according to Quotable Value. More>>

ALSO:

Cash Money: Reserve Bank Launches New $5 And $10 Banknotes

The $5 and $10 final banknotes were revealed at an event at the Bank in Wellington, and will start to be released from mid-October 2015. More>>

ALSO:

Truck Sales Booted: Commerce Commission Files Charges Against Mobile Trader

The Commerce Commission has filed charges against a mobile trader, or truck shop operator, claiming he obtained money from customers by deception and never intended to supply them with the goods they paid for. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news