NZ dollar heads for weekly gain as Dow tops 9000

NZ dollar heads for weekly gain as Dow tops 9000; RBNZ awaited

July 24 (BusinessWire) – The New Zealand dollar headed for its second weekly gain as stronger U.S. housing resales and better-than-expected results from Ford Motor Co. and AT&T pushed the Dow Jones Industrial Average above 9000.

The kiwi dollar was recently at 65.40 U.S. cents, up from 64.43 cents a week ago. The currency slipped from 66.22 cents overnight. Benchmark stock indexes in Europe and the U.S. climbed more than 2% after National Association of Realtors figures showed U.S. sales existing homes rose 3.6% to an annual rate of 4.89 million in June, the third monthly advance. The Chicago Board Options Exchange’s volatility index, or VIX, regarded as Wall Street’s fear gauge, fell 0.2% to 23.43 as better-than-expected results helped give investors more appetite for risk.

“Risk appetite is in good heart as we come to the end of the week,” said Danica Hampton, currency strategist at Bank of New Zealand, in a report.

The New Zealand dollar was little changed at 62.11 yen from 62.19 yesterday and traded at 80.40 Australian cents from 80.53. Against the euro, the kiwi was at 46.21 from 46.33.

New Zealand earnings for the second quarter are due to kick off next week, with a dip in profits already priced in to stocks, investors say. Also next week, Reserve Bank Governor Alan Bollard is scheduled to release his monetary policy statement on July 30. Bollard will keep the official cash rate at a record low 2.5%, according to economists surveyed by Reuters.

The kiwi dollar has surged by about a third against the greenback from its low in early March and its strength makes it harder for New Zealand’s economy to rebalance away from domestic consumption toward export-led growth and investment.

“The strength in the NZ dollar continues to undermine the economic outlook, and we continue to see the case for further stimulus,” said Jane Turner, economist at ASB. Still, “the RBNZ is likely to stick to its assumption that the NZ dollar will weaken substantially, meaning it is not yet prepared to deliver further OCR cuts.”

(BusinessWire)

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