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NZ Dollar Outlook: Kiwi may fall on growth concerns, ECB

NZ Dollar Outlook: Kiwi may fall on growth concerns, ECB inaction

By Hannah Lynch

Aug. 13 (BusinessDesk) - The New Zealand dollar may fall this week amid continued concern that global growth remains stalled as investors await news of European Central Bank action.

The New Zealand dollar recently traded at 81.16 US cents little changed from 81.13 cents at 8am. That's right in the middle of this week's forecast trading range of 80 cents to 82.30 cents, according to a BusinessDesk survey of five analysts.

All of the analysts surveyed predict the kiwi will finish the week lower.

Figures on Friday showed China's exports grew a lower-than-expected 1 percent in July and economists predict data out of Europe this week will show the region’s economy contracted for a second quarter. Spanish and Italian two- year notes fell on speculation the European Central Bank will no longer buy government debt.

German Chancellor Angela Merkel returns from a two-week holiday on Monday. Merkel hasn't yet commented on the European Central Bank’s plans to buy bonds to help ease the euro-zone debt crisis. Details of the plan will be released in coming weeks.

"You will get comment out of the ECB this week," said Alex Sinton, senior dealer at ANZ New Zealand. "Is it around a solution - I doubt it - is it around that we recognise how tough things are - most likely - it will not paint anything new."

Economists predict data out of Europe on Tuesday will show the region’s economy contracted for a second quarter. Gross domestic product in the euro zone shrank 0.2 percent in the June quarter, following a 0.1 percent decline in the previous three months, according to a Bloomberg poll. That's prompted talk powerhouse Germany may be pulled into recession before the end of the year.

The UK's consumer price index will be released on Tuesday, followed by minutes from the Bank of England's August meeting on Wednesday. That's followed by the release of British retail sales on Thursday. The kiwi was little changed at 51.80 British pence from 51.77 pence.

Data out of the US this week will offer a raft of fresh clues about the state of the world's largest economy. Retail sales, business inventories, the consumer price index, industrial production and housing starts are all set for release this week.

Commerce Department data out on Tuesday is expected to show that sales at American retailers advanced in July for the first time in four months.

"The US data should be better than expected," said Imre Speizer, market strategist at Westpac Banking Corp. "That might be bad for risk because it implies less chance of quantitative easing."

Australia, New Zealand biggest export market, will release its business confidence figures on Tuesday, followed by consumer confidence and wage costs on Wednesday. The kiwi rose to 76.95 Australian cents from 76.79 cents at 8am.

New Zealand's food price index rose 0.2 percent in July for a 1.8 percent fall in the year, according to Statistics New Zealand figures today. The retail trade survey for the June quarter is due on Tuesday and Fonterra's GlobalDairyTrade Auction, ANZ Job Advertisements and the BNZ New Zealand Performance Manufacturing Index on Thursday.


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