NZ dollar heads for 0.5% weekly decline on brighter US economy, slowing local growth
By Paul McBeth
Aug. 29 (BusinessDesk) - The New Zealand dollar is heading for a 0.5 percent weekly decline against the greenback as the US economy continues to gain momentum, spurring expectations for higher US rates, while the local growth outlook loses its lustre.
The kiwi fell to 83.67 US cents at 5pm in Wellington from 84.07 cents on Friday in New York last week. It was down from 83.82 cents at 8am and 83.91 cents yesterday. The trade-weighted index fell to 78.90 from 79.06 yesterday, and is heading for a 0.5 percent weekly decline from 79.29.
A BusinessDesk survey of 11 traders and strategists on Monday predicted the kiwi would trade between 82.20 US cents and 84.70 cents this week. Nine expected the kiwi to decline, while two expected it to remain relatively unchanged.
The US dollar index, which measures the greenback against a basket of currencies, reached a 13-month high this week as US data pointed to a recovery in the world's biggest economy, fuelling expectations the Federal Reserve will start hiking interest rates earlier and faster than previously anticipated. At the same time, New Zealand's outlook has started to dim, with a survey today showing business confidence fell for a sixth month in August, as commodity prices come off the boil and after Treasury downgraded its growth forecast.
"The US data's been fine so far, but I think we'll get a soft patch in the data before year-end," said Imre Speizer, market strategist at Westpac Banking Corp in Auckland. "That's when the kiwi can go for a mini-bounce into the mid-80s."
The local currency is heading for a 1.5 percent decline against the greenback in August, adding to its 3 percent drop in July, and Westpac's Speizer said it might bounce in the next few days before heading into the low 80s. The TWI is heading for a 1.1 percent monthly decline.
New Zealand government figures today showed the number of building consents issued in July rose 0.1 percent as an increasing number of permits in Auckland offset a decline in Canterbury, which is further through the construction cycle.
The local currency fell to 89.48 Australian cents from 89.65 cents yesterday and was little changed at 86.84 yen from 86.89. It was almost unchanged at 63.49 euro cents from 63.50 cents yesterday, and decreased to 50.44 British pence from 50.55 pence.