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


NZ dollar falls as business confidence sinks to 6-year low

NZ dollar falls as business confidence sinks to 6-year low, US jobs data eyed

By Jonathan Underhill

Aug. 31 (BusinessDesk) - The New Zealand dollar fell after figures showed business confidence sank to a six-year low this month, stoking speculation the Reserve Bank will be prepared to make deeper cuts to interest rates to revive an economy showing little sign of accelerating inflation.

The kiwi fell to 64.21 US cents as at 5pm, in Wellington, from 64.53 cents at the New York close on Friday. The trade-weighted index fell to 69.49 from 69.98.

The ANZ Business Outlook showed a net 29 percent of businesses surveyed are pessimistic about the general economy, while the measure of firms' own activity expectations fell 7 points to +12, also a six-year low. For agriculture, a net 28 percent saw worse times ahead, a record low. Inflation expectations were unchanged at about 1.7 percent, below the 2 percent mid-point of the central bank's target band.

"The business confidence survey was indeed pretty horrible and the market reacted as it should," said Imre Speizer, senior market strategist at Westpac Banking Corp. "It starts to speak to our view that we will get lower than a 2.5 percent official cash rate. Business confidence is falling away pretty fast."

The OCR is currently at 3 percent and the Reserve Bank's next opportunity to review the rate and its economic forecasts is with the Sept. 10 monetary policy statement. It has two further opportunities, officially, this year, at its OCR review on Oct. 29 and the next full MPS on Dec. 10.

The kiwi had already weakened against a broadly stronger greenback after US Federal Reserve vice chair Stanley Fischer told a central bankers' conference at Jackson Hole, Wyoming, at the weekend that the Fed remained on track for lift-off this year and that the “door remains open” to a September hike.

US payrolls data for August, due out on Friday in the US, are also expected to be negative for the kiwi, with the world's biggest economy forecast to have added 235,000 jobs this month, up from 215,000 in the previous month. Chinese manufacturing figures for manufacturing, due out tomorrow, will also be closely watched, Speizer said.

The kiwi may trade between 62.50 US cents and 67.50 cents this week, according to a BusinessDesk survey of 10 currency advisers today. Six expect the kiwi to decline, two say it may gain and two bet it will remain largely unchanged. Stronger US jobs data will increase the chance of a Federal Reserve interest rate hike next month, they said.

The New Zealand dollar fell to 89.78 Australian cents after the confidence survey from 90.20 cents on Friday. The kiwi fell to 57.05 euro cents from 57.50 cents on Friday and dropped to 77.76 yen from 78.33 yen. It fell to 4.0961 yuan from 4.1372 yuan and sank to 41.62 British pence from 41.93 pence.

The two-year swap rate rose about 3 basis points to 2.76 percent and the 10-year swaps rose 2 basis points to 2.95 percent.


© Scoop Media

Business Headlines | Sci-Tech Headlines


NZTA: Major New Zealand Upgrade Programme Projects Go To Tender

Two major New Zealand Upgrade Programme projects are beginning tenders for construction. The New Zealand Upgrade Programme is a $6.8 billion investment to get our cities moving, to save lives and boost productivity in growth areas. The first Auckland ... More>>

Reserve Bank: RBNZ Seeks To Preserve Benefits Of Cash

The Reserve Bank – Te Pūtea Matua is taking on a new role of steward of the cash system “to preserve the benefits of cash for all who need them”, Assistant Governor Christian Hawkesby told the Royal Numismatics Society of New Zealand annual conference ... More>>


Economy: Double-Dip Recession Next Year, But Housing Rolls On

New Zealand's economy is expected to slip back into recession early next year as delayed job losses, falling consumer spending, and the absence of international tourists bites into growth. More>>


Microsoft New Zealand: Microsoft Expands “Highway To A Hundred Unicorns” Initiative To Support Startups In Asia Pacific

New Zealand, 14 October 2020 – Today Microsoft for Startups launches the Highway to a Hundred Unicorns initiative in Asia Pacific to strengthen the region’s startup ecosystem. This follows the initiative’s success in India, where 56 startups were ... More>>

Fonterra: Farmers Taking Another Step Towards New Zealand’s Low Emissions Food Production

They’re hot off the press and intended to help take the heat out of climate change. Fonterra farmers are already among the world’s most sustainable producers of milk and now have an additional tool in their sustainability toolbox. Over the last few ... More>>


Electricity: New Zealand Remains In Top 10 For Energy Balance

The World Energy Council’s Energy Trilemma Index has become part of the energy dialogue both globally and in New Zealand. The Index illustrates the need for countries to balance energy security, energy equity and environmental sustainability. New Zealand ... More>>


Courts: Businessman Eric Watson Sentenced To A Four-Month Jail Term

New Zealand businessman Eric Watson has been sentenced to a four-month jail term in the UK for contempt of court, TVNZ reports. More>>

OECD: Area Employment Rate Falls By 4.0 Percentage Points, To 64.6% In Second Quarter Of 2020

The OECD area employment rate – the share of the working-age population with jobs – fell by 4.0 percentage points, to 64.6%, in the second quarter of 2020, its lowest level since the fourth quarter of 2010. Across the OECD area, 560 million persons ... More>>

Spark: Turns On 5G In Auckland And Offers A Glimpse Into The Future Of Smart Cities

Spark turned on 5G in downtown Auckland today and has partnered with Auckland Transport (AT) to showcase some of the latest in IoT (Internet of Things) technology and demonstrate what the future could look like for Auckland’s CBD with the power of 5G. 5G is ... More>>

Stats NZ: Monthly Migration Remains Low

Since the border closed in late-March 2020, net migration has averaged about 300 a month, Stats NZ said today. In the five months from April to August 2020, overall net migration was provisionally estimated at 1,700. This was made up of a net gain ... More>>

University of Canterbury: Proglacial Lakes Are Accelerating Glacier Ice Loss

Lake Tasman, New Zealand | 2016 | Photo: Dr Jenna Sutherland Meltwater lakes that form at glacier margins cause ice to recede much further and faster compared to glaciers that terminate on land, according to a new study. But the effects of these glacial ... More>>


Dairy: Fonterra Sells China Farms

Fonterra has agreed to sell its China farms for a total of $555 million (RMB 2.5 billion*1), after successfully developing the farms alongside local partners. Inner Mongolia Natural Dairy Co., Ltd, a subsidiary of China Youran Dairy Group Limited ... More>>