NZ dollar may fall vs. euro, pound amid signs of recovering European economies
By Paul McBeth
Aug. 12 (BusinessDesk) - The New Zealand dollar may fall this week against the euro and the British pound amid expectations the European and UK economies are turning a corner.
The kiwi rose to 60.30 euro cents at 5pm in Wellington from 59.72 cents last week and advanced to 51.87 British pence from 51.42 pence. It traded at 80.34 US cents at 5pm, unchanged from 8am and little changed from 80.43 cents on Friday in New York.
The euro-zone economy grew 0.2 percent in the second quarter, ending the region’s longest recession since the single currency was introduced 14 years, according to a Bloomberg survey of economists. The figures will be released on Aug. 14, and will come out the same day as Britain’s employment data, which will likely show the UK’s jobless rate was unchanged at 7.8 percent. Investors are getting more upbeat about the prospects for the European economy after the protracted sovereign debt crisis threatened to break up the economic union.
“The European and UK recovery seems to be here,” said Mike Jones, currency strategist at Bank of New Zealand in Wellington. “If they’re good economic numbers, we may have seen the peak on the kiwi/euro and kiwi/sterling crosses.”
New Zealand house sale figures showed an increase in the volume of turnover and prices last month, and banks are preparing for the Reserve Bank to impose lending restrictions on low equity loans as early as this week.
The main pieces of local data this week will be the NAB business confidence survey in Australia and New Zealand’s second-quarter retail sales figures.
A BusinessDesk survey of nine traders and strategists predict the kiwi may trade between 78.50 US cents and 82.50 cents this week. Five expect the kiwi to remain relatively unchanged and four predict it will gain.
The local currency rose to 77.51 yen at 5pm in Wellington from 77.06 yen on Friday and fell to 87.32 Australian cents from 87.68 cents last week. The trade-weighted index gained to 75.36 from 75.01 on Friday.