NZ Dollar Outlook: Kiwi to rise on Spain rescue; RBNZ looms   11 Jun 2012

Article - BusinessDesk

NZ Dollar Outlook: Kiwi may rise on Spanish rescue as RBNZ looms

By Hannah Lynch

June 11 (BusinessDesk) - The New Zealand dollar may finish the week higher as markets digest a 100 billion euro rescue package for Spain's banks and the Reserve Banks review the official cash rate on Thursday.

The New Zealand dollar recently traded at 77.63 US cents, up from 77.53 cents at 8am and 76.97 cents at the close of trading in New York on Friday. That's right in the middle of this week's predicted trading range of 76.50 cents to 78.50, according to a BusinessDesk survey of five analysts.

Four out of the five analysts surveyed said the kiwi will finish the week higher, while one said it will finish the week lower.

Spain will become the fourth euro-zone nation to receive a financial bailout after European Union finance ministers agreed to shore up the nation's banking sector following an emergency conference call over the weekend. Leaders didn't make clear whether the loans would come from the region's permanent support fund, the European Stability Mechanism or its temporary European Financial Stability Fund. The EU and IMF have now committed half a trillion euros in euro-zone bailouts.

"It is simply another measure to stop the crisis spreading to other counties," said Peter Cavanaugh, senior client adviser at Bancorp. "The government is doing okay but the burden of the banks bailout would be too much."

Spain's aid comes a week before Greece's second round of elections on June 17. The result will be closely watched by markets in the event voters deiced to elect a government that decides to leave the region's shared currency.

"It will be the global pictures that will continue to determine the kiwi's direction," said Mike Jones, market strategist at Bank of New Zealand. "We will see focus quickly shift back to Greece - the elections will be pretty tough to call so the New Zealand dollar will be tossed around on global whims."

Germany, the Netherlands, Austria and Italy are preparing to sell bonds this week. The Netherlands will sell up to 2.5 billion euros of 2033 bonds on Tuesday, while Germany is set to offer 5 billion euros of 2022 bonds on Wednesday.

In New Zealand traders have pared their bets that the Reserve Bank will follow Australia in cutting interest rates at Governor Alan Bollard's quarterly Monetary Policy Statement review on Thursday. A tepid local recovery and global risks, especially in Europe are likely to keep the official cash rate unchanged at 2.5 percent, according to all 14 economists in a Reuters survey.

"A dovish statement consolidated with no signal to cut rates will cause a fall in interest rates and the kiwi," said Imre Speizer, market strategist at Westpac Banking Corp.

Reserve Bank of Australia Governor Glenn Stevens cut the target cash rate by 25 basis points to 3.5 percent, last week. That's the smallest gap between the Trans-Tasman benchmark rates since November 2009.

In China, New Zealand's second largest export market, the People's Bank of China unexpectedly cut interest rates to 0.25 percent on Friday to help stimulate its economy, while European Central Bank and Bank of England policy makers kept rates unchanged.

The New Zealand dollar increased to 61.61 yen from 61.16 yen at the close of trading in New York on Friday as the Bank of Japan also prepares to meet this week. The BOJ is not expected to announce any new initiatives after its left asset-purchases unchanged at its May meeting. The central bank now regards asset purchases as its key monetary easing tool.

In the world's largest economy, the US, there is a raft of data set for release this week, with producer prices and retail sales due out on Wednesday, followed by the consumer price index and initial weekly jobless claims on Thursday.

New Zealand's accommodation survey for April and electronic card transactions for May are scheduled for release on Tuesday followed by the food price index on Thursday from Statistics New Zealand. The ANZ Roy Morgan Consumer Confidence survey will be released on Friday.

(BusinessDesk)

Add a comment

Bookmark and Share

News

Royal succession laws come into force

26 Mar 2015 News
Legislation modernising rules applying to Royal succession to the throne came into force today in New Zealand and in the 16 Realms... more

McCully visits Iraq ahead of NZ deployment

24 Mar 2015 News
  Foreign Minister Murray McCully travelled to Baghdad yesterday for talks with Iraq’s Prime Minister Mr Haider al-Abadi... more

Business

NZ milk powder futures drop as Fonterra lifts GDT volumes

27 Mar 2015 Business News
Article - BusinessDesk   NZ milk powder futures drop as Fonterra lifts GDT volumes, signalling prices will fall By Tina ... more

NZ commercial property lending less risky now: RBNZ

26 Mar 2015 Business News By Fiona Rotherham
  NZ commercial property lending less risky now due to lower debt funding March 26 (BusinessDesk) - The Reserve Bank said New... more

Living

2degrees lights up Auckland Harbour Bridge in World First

13 Mar 2015 Lifestyle
Fusing light, music, mobile and one of Auckland’s most recognisable landmarks together – 2degrees launched another Kiwi... more

Third Thursday Set to Groove

9 Mar 2015 Lifestyle
The sounds of legendary jazz musician Charles Mingus is set to raise the beat of Wellington’s waterfront on 19 March, when the... more

Property

NZ house prices rise 3.6% in February

12 Mar 2015 Property By Tina Morrison
  NZ house prices rise 3.6% in February, led by a 14% jump in Auckland prices March 12 (BusinessDesk) - New Zealand residential... more

Revealed: Auckland's cheapest suburbs

9 Mar 2015 Property
Many home buyers face long commute to Auckland jobs as they move to Wellsford, Pokeno and Hamilton. Only six areas of Auckland still... more

Migration

PM plays down claim war criminals are living in NZ

2 Mar 2015 Migration
Prime Minister John Key says he is not aware of any suspected war criminals from the former Yugoslavia in New Zealand. The claim that... more

NZ migration rose to record in 2014

30 Jan 2015 Migration By Tina Morrison
  NZ migration surged to record in 2014, helped by robust economy Jan. 30 (BusinessDesk) - New Zealand migration surged to a... more

Travel

Foss welcomes agreement for rental vehicle code

17 Mar 2015 Travel & Tourism
Associate Transport Minister Craig Foss is welcoming a move by the rental vehicle industry to establish a Code of Best Practice to... more

Productive discussions on Queenstown’s tourism workforce

6 Mar 2015 Travel & Tourism
Sustainable workforce solutions were at the centre of discussions between Government Ministers and tourism industry representatives... more

Sport

ICC World Cup 2015: Sunday doesn’t guarantee success but it gives the greatest chance, says McCullum

28 Mar 2015 Cricket
Q. Who won the real battle of big brother against little brother?BRENDON McCULLUM: I think he won, but I definitely had some mad... more

ICC World Cup 2015 Match official appointments for final announced

28 Mar 2015 Cricket
The International Cricket Council today announced the match official appointments for the final of the ICC Cricket World Cup 2015,... more

Columns

ICC World Cup 2015: STEPHEN FLEMING: YES, NEW ZEALAND CAN!

28 Mar 2015 Opinion
Former New Zealand captain says the team will be focusing on enjoying themselves, knowing they are part of something that will be the... more

Gordon Campbell on a funeral in Asia and Northland

27 Mar 2015 Opinion By Gordon Campbell
  Gordon Campbell on a funeral in Asia, the Northland by-election, and news priorities Supposedly, New Zealand’s destiny... more

Kiwi Success

Tower names Seniors Money's Brett Wilson as CFO

18 Mar 2015 Appointments
  Tower names Seniors Money's Brett Wilson as CFO, replacing Boggs March 18 (BusinessDesk) - Tower, the listed general insurer,... more

Kiwi start-up Glassjar launches payments app in the US

6 Mar 2015 People
Glassjar, the kiwi software start-up whose app provides people an easy way of sharing bills, has launched in the United States. The... more

Recruitment

NZ Government moves to strengthen employment standards

26 Mar 2015 Recruitment
Workplace Relations and Safety Minister Michael Woodhouse today announced a package of measures to strengthen enforcement of minimum... more

RESEND: 63% of Warehouse permanent staff now on career wage

20 Mar 2015 Recruitment By Fiona Rotherham
  RESEND: Warehouse says 63% of permanent staff now on 'career retailer wage' (Fixes fourth paragraph to show Warehouse is... more