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

 

Wine: 20% Of Marlborough Storage Tanks Damaged By Quake

An estimated 20 percent of wine storage tanks in the Marlborough region, the country’s largest wine producing area, have been damaged by the impact of the recent Kaikoura earthquake. More>>

ALSO:

ACC: Levy Recommendations For 2017 – 2019 Period

• For car owners, a 13% reduction in the average Motor Vehicle levy • For businesses, a 10% reduction in the average Work levy, and changes to workplace safety incentive products • For employees, due to an increase in claims volumes and costs, a 3% increase in the Earners’ levy. More>>

Women's Affairs: Government Accepts Recommendations On Pay Equity

The Government will update the Equal Pay Act and amend the Employment Relations Act to implement recommendations of the Joint Working Group on Pay Equity. More>>

ALSO:

Immigration: Increase In Seasonal Workers For RSE

The current cap will be increased by 1,000 from 9,500 to 10,500 RSE workers for the 2016-17 season. Mr Woodhouse says the horticulture and viticulture industry is New Zealand’s fourth largest export industry, producing almost $5 billion in exports. More>>

ALSO:

Hurunui: Crown Irrigation Invests Up To $3.4m In North Canterbury

Crown Irrigation Investments will invest up to $3.4m in the Hurunui Water Project, an irrigation scheme that will be capable of irrigating up to 21,000 hectares on the south side of the Hurunui River in North Canterbury. More>>

ALSO:

Not So Great:Butterfly Eradication Success

The invasive pest great white butterfly has been eradicated from New Zealand in a world-first achievement, Primary Industries Minister Nathan Guy and Conservation Minister Maggie Barry say. More>>

Gordon Campbell: On The Government’s Tax Cuts Fixation

Long before the earthquake hit, the dodginess of the government tax cuts programnme was evident in the language of its packaging. It is being touted as a “tax cuts and family care” package... More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news