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

 

NZ dollar rises on growing inflation expectations

NZ dollar rises on growing inflation expectations, US CPI looms

By Rebecca Howard

Feb. 14 (BusinessDesk) - The New Zealand dollar rose after the Reserve Bank's survey of expectations showed firms are predicting inflationary pressures, and ahead of US inflation which may offer a steer on the Federal Reserve's interest rate track.

The kiwi gained to 73.31 US cents as at 5pm in Wellington from 72.77 cents as at 8am and 72.62 cents late yesterday. The trade-weighted index increased to 75.10 from 74.62.

The RBNZ's March quarter survey showed firms lifted their two-year inflation expectations to 2.11 percent from 2.02 percent in the prior period, while one-year inflation expectations remained steady at 1.86 percent. The central bank has signalled it will keep the official cash rate at a record low 1.75 percent until the latter half of next year at the earliest but does keep a close eye on the expectations as they have an impact on wage and pricing setting behaviour.

"The dollar got quite a bounce from the inflation expectations," Westpac Banking Corp head of NZ strategy Imre Speizer said. It is a "bit of a puzzle" as to why the two-year inflation expectations lifted while the one-year outlook was steady, but Speizer said firms may be factoring in new government initiatives and a revised policy targets agreement, both of which will take some time to have an impact.

The survey also showed early signs of wage inflation and Speizer said that may have added to the kiwi's bounce. Annual hourly wage growth for one year ahead is seen at 2.48 percent versus 2.25 percent in the prior survey and increases to 2.68 percent in two years from 2.57 percent.

Investors are now waiting for US inflation data for January. Headline consumer price inflation is forecast to slow to an annual 1.9 percent and core inflation to 1.7 percent. If inflation is higher the greenback should get a solid lift as it will solidify expectations the Federal Reserve will be lifting rates in March.

The kiwi gained to 92.93 Australian cents from 92.29 cents yesterday and increased to 52.66 British pence from 52.46 British pence. It traded at 59.16 euro cents from 59.06 cents, and rose to 4.6425 yuan from 4.5810 yuan but fell to 78.34 yen from 78.82 yen as Japan's currency gained traction against the greenback.

New Zealand's two-year swap rate fell 1 basis point to 2.14 percent, while 10-year swaps fell 5 points to 3.25 percent.

(BusinessDesk)

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

Climate Summary: NZ’s Equal-2nd Warmest Year On Record

Annual temperatures were above average (+0.51°C to +1.20°C above the annual average) across the majority of New Zealand... 2018 was the equal 2nd-warmest year on record for New Zealand, based on NIWA’s seven-station series which began in 1909. More>>

ALSO:

GDP: Economic Growth Dampens In The September Quarter

Gross domestic product (GDP) rose 0.3 percent in the September 2018 quarter, down from 1.0 percent in the previous quarter, Stats NZ said today... GDP per capita was flat in the September 2018 quarter, following an increase of 0.5 percent in the June 2018 quarter. More>>

ALSO:

Up $1.20: $17.70 Minimum Wage For 2019

Coalition Government signals how it will move toward its goal of a $20 p/h minimum wage by 2021... “Today we are announcing that the minimum wage will increase to $17.70 an hour on 1 April 2019." More>>

ALSO:

Retail: IKEA To Open In New Zealand

Inter IKEA Systems B.V. is today announcing its intentions to grant the Ingka Group exclusive rights to explore expansion opportunities in New Zealand. More>>