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


NZ dollar hits new 5-year high vs. Australian dollar

NZ dollar hits new 5-year high vs. Aust on Fonterra milk price hike, upbeat business confidence

By Paul McBeth

July 31 (BusinessDesk) - The New Zealand dollar hit a new five-year high against its Australian counterpart as a higher forecast milk price by Fonterra Cooperative Group and jubilant local businesses show a growing contrast in the fortunes of the trans-Tasman economies.

The kiwi rose as high as 88.40 Australian cents, trading at 88.30 cents at 5pm from 87.96 cents yesterday. The currency was little changed at 79.77 US cents at 5pm in Wellington from 79.74 cents at 8am, down from 79.92 cents yesterday.

Fonterra raised its forecast payout to farmers for the 2014 season by 50 cents to $7.50 per kilogram of milksolids amid slow global supply and a weaker kiwi dollar, fuelling optimism for New Zealand’s biggest export. Meantime, the ANZ Business Outlook showed firms’ confidence at a 14-year high on the strength of optimism in the building sector.

That shows the growing divergence between the New Zealand and Australian economies, with interest rates expected to start rising on this side of the Tasman and another rate cut anticipated in for Australia. The yield on New Zealand’s two-year government bond was 2.88 percent today, some 44 basis points above its Australian counterpart, even though New Zealand’s official cash rate at 2.5 percent is lower than Australia’s 2.75 percent.

“Most of the attention was on the relentless upward march of the kiwi/Aussie cross,” said Mike Jones, currency strategist at Bank of New Zealand in Wellington. “Fonterra's upward revision to its milk price, and the upbeat ANZ Business Confidence survey only added fuel to the fire, and a test of 90 Australian cents now looks probable.”

In a note today, Jones said the New Zealand/Australian dollar cross looks expensive on a fair value basis, but that a correction looks unlikely.

That comes as traders wait on the Federal Open Market Committee’s review of US monetary policy after a two-day meeting in anticipation of any clues as to the Federal Reserve’s plans to start unwinding its massive stimulatory programme. Chairman Ben Bernanke has said the Fed may pull back quantitative easing later this year and end the programme in mid-2014 as long as the economy continues to improve in line with the Fed’s forecasts.

Before the Fed announcement, investors will be looking at US second-quarter gross domestic product figures, which will likely show annual growth slowed to 1 percent in the quarter, from 1.8 percent in the first quarter, according to Reuters polls.

The local currency slipped to 78.20 yen from 78.58 yen yesterday and edged down to 60.16 euro cents from 60.28 cents. It advanced to 52.40 British pence from 52.13 pence yesterday, and traded at 75.49 on the trade-weighted index from 75.55.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Stats NZ: Election Boosts October Job Numbers

Job numbers were boosted by general election staff in October 2020, along with rises in the manufacturing, retail, and hospitality industries, Stats NZ said today. Filled jobs rose by 27,667 to 2.2 million in October 2020 compared with September, after ... More>>

Government: New Year Border Exception For Seasonal Workers In The Horticulture And Wine Industries

2000 additional RSE workers to enter New Zealand early next year employers must pay these workers at least $22.10 an hour employers will cover costs of managed isolation for the RSE workers RSE workers will be paid the equivalent of 30 hours work a week ... More>>


Grey Power: Is Disappointed To Learn Of More Bank Closures

Many older people are being left without essential services because of cost cutting and the march of modern technology. It is now expected that most banking transactions can occur via the internet or telephone. Jan Pentecost, President of the Grey Power ... More>>


Media: Discovery, Inc. Completes Acquisition Of New Zealand’s Mediaworks TV Ltd

Auckland, New Zealand, December 1, 2020 - Discovery, Inc. (“Discovery”), the global leader in real-life entertainment, has completed its acquisition of New Zealand’s leading independent free-to-air commercial broadcaster, MediaWorks TV Ltd, now operating ... More>>

Department Of Conservation: Big Year Underway At Albatross Colony

Familiar faces are returning for the new season of Royal Cam, with a big breeding year underway for the toroa/northern royal albatross colony on Otago’s windswept Pukekura/Taiaroa Head. More than 120 albatrosses, a taonga species, have returned ... More>>

Real Estate: ASB Survey Reveals Majority Of Kiwis Expect House Prices To Keep Climbing


House price expectations are soaring as New Zealand’s housing market shifts up a gear. But stretched affordability is putting a dent in perceptions of whether it’s a good time to buy. While Kiwis reveal they do expect interest rates to fall further. ... More>>

Stats NZ: Births And Deaths: Year Ended September 2020

Births and deaths releases provide statistics on the number of births and deaths registered in New Zealand, and selected fertility and mortality rates. Key facts For the year ended September 2020: 57,753 live births and 32,670 deaths ... More>>