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

 


Continued US Dollar strength keeps Kiwi on the ropes

Prospect of continued US Dollar strength keeps Kiwi on the ropes.


By Garry Dean (Sales Trader, CMC Markets New Zealand)

The weekend’s gathering of global central bankers at Jackson Hole has reinforced the different challenges facing major economy’s at present, and endorsed the view of a stronger US Dollar. Fed Chair Janet Yellen acknowledges the improving unemployment rate, but remains cautions given the significant slack in the labour market, the low level of participation, high part-time workers and lack of pressure on wages. That said, her address on the weekend was less dovish than expected, and traders seized on her comment that rates may need to rise sooner than expected if the labour market recovers faster than anticipated. This has propelled the US Dollar to levels not seen in almost a year, continuing to keep the Kiwi under pressure.

In contrast, ECB President Mario Draghi’s speech confirmed the ECB stands prepared to respond with all its available tools should inflation drop further, suggesting QE style stimulus is increasingly likely. European equity markets have responded to this dovish address with rallies of close to 2% overnight. Not surprising then to see Euro gap below 1.3200 at yesterday’s open, with the Kiwi losing half a cent in turn. RBNZ intervention rumours seem unfounded, the Kiwis decline merely reflecting the trader assessment that US rate hikes are drawing nearer, and the US dollar has potential to appreciate further in this environment. This suggests Kiwi resistance will again be solid at 0.8400, with key medium-term support seen at 0.8260.

The level of the TWI will be of growing interest to the RBNZ, as we open this morning at 78.80. This is well below the 79.7 September projection detailed in the June MPS, and also below the 79.0 December projection. The MPS for September will be a balancing act, as the RBNZ weigh last week’s large PPI declines, falling RBNZ inflation expectations and weaker dairy prices with the inflationary impact of increasing demand pressures from surging immigration and now a weaker exchange rate. The NZD/AUD cross has broken below the psychological 0.9000 level, but now faces major support at 0.8930. This was a key level of resistance throughout the Aug – Nov period last year, and should provide solid support now, with the downside move in this cross looking accentuated at present.

ends

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Constructions Builds: Consents Top $2 Billion For The First Time

Building consents reached a record $2 billion in March 2017, boosted by new homes and several big non-residential projects, Stats NZ said today. This was up 37 percent compared with March 2016. More>>

Other Stats:

Health: Work Underway To Address Antimicrobial Resistance

As part of a global response the Ministries of Health and Primary Industries have today jointly published ‘Antimicrobial Resistance: New Zealand’s current situation and identified areas for action’ to respond to the changing pattern of antimicrobial resistance in New Zealand. More>>

ALSO:

Employment: Vodafone Announces Family Violence Policy To Support Team

From today, any of Vodafone’s 3,000 workers affected by family violence will be eligible for a range of practical support, including up to 10 additional days of paid leave per year. More>>

Burning Up Over Saturn: Cassini's Grand Finale

With propellant running low, NASA scientists are concerned that the probe might accidentally crash into one of Saturn’s nearby moons, which could contaminate it with Earthling bacteria stuck to the spacecraft. Instead, the spacecraft will be safely "disposed" in Saturn's atmosphere. More>>

ALSO:

Our Fresh Water: Monitoring Report Confirms Serious Challenges For Rivers

• nitrogen levels are getting worse at 55 percent and getting better at 28 percent of monitored river sites across New Zealand • phosphorus levels are getting better at 42 percent and getting worse at 25 percent of monitored river sites across New Zealand More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news