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

On The Nation: Lisa Owen interviews John Tamihere

23 Jul 2016 News
The Nation On The Nation: Lisa Owen interviews John Tamihere and David Seymour Youtube clips from the show are available more

Government acknowledges ‘herculean’ task

22 Jul 2016 News
New Zealand Government Hon Dr Nick SmithMinister for the Environment 22 July 2016   The work of the Judge David Kirkpatrick-led... more

Business

NZ caught in global backlash against Chinese steel imports

18 Jul 2016 Business News By Pattrick Smellie
Article - BusinessDesk Monday 18 July 2016 05:16 PM NZ caught in global backlash against Chinese steel imports July 18 (BusinessDesk)... more

Lobby welcomes customer obligation for financial advice

13 Jul 2016 Business News
Article - BusinessDesk Wednesday 13 July 2016 03:10 PM Regulator, shareholder lobby welcome customer obligation for financial... more

Living

Young New Zealanders Making Films For Good

18 Jul 2016 Lifestyle
The Outlook for Someday Young New Zealanders Making Films For Good What does sustainability mean to you? Since 2007 The Outlook for... more

Review: NZ's Pitch Black - live in London

8 Jul 2016 Entertainment By Charlotte Everett
20 years after their debut at The Gathering, Pitch Black have satiated a packed venue of fans at London’s Oslo, in... more

Property

All five leading retail banks require 40% property deposit

21 Jul 2016 Property By Fiona Rotherham
Article - BusinessDesk Thursday 21 July 2016 04:55 PM UDATE: All five leading retail banks require 40% deposit from property ... more

Auckland house prices up 85% in four years

15 Jul 2016 Property
Article - BusinessDesk Friday 15 July 2016 12:27 PM Auckland house prices up 85% in four years By Fiona Rotherham and Tina... more

Migration

Kiwis could be affected by tighter UK rules

30 Mar 2016 Migration By Audrey Young
British High Commissioner Jonathan Sinclair is defending changes to skilled migrant rules for Britain but suggests they won't affect... more

Immigrants' attitudes to corruption worries SFO

17 Feb 2016 Migration By Sophie Boot
Feb. 17 (BusinessDesk) - New Zealand's record inbound migration has undermined the country's squeaky-clean reputation because of an... more

Travel

NZ guest nights fell in May

12 Jul 2016 Travel & Tourism By Tina Morrison
Article - BusinessDesk NZ guest nights fell in May, snapping 25 consecutive monthly gains July 12 (BusinessDesk) - New Zealand guest... more

China's Tianjin Airlines eyes Auckland service

11 Jul 2016 Travel & Tourism
Article - BusinessDesk Monday 11 July 2016 03:36 PM China's Tianjin Airlines eyes Auckland service By Edwin Mitson July 11... more

Sport

NZ shearers in Wales

22 Jul 2016 Sport
Shearing Sports New Zealand NZ shearers in Wales July 21, 2016 World champion shearer Rowland Smith has become the fifth New... more

Wellington A Black wins Netball NZ U17 Champs title

21 Jul 2016 Netball
Netball New Zealand Wellington A Black wins Netball NZ U17 Champs titleMedia ReleaseThursday 21 July, 2016The capital has, for the... more

Columns

Gordon Campbell on Tony Blair and the Chilcot Report

7 Jul 2016 Opinion
Column - Gordon Campbell Gordon Campbell on Tony Blair and the Chilcot Report | werewolf more

Gordon Campbell on our refugee response, and a TPP rewrite

14 Jun 2016 Opinion
Column - Gordon Campbell   Gordon Campbell on our paltry refugee response and a brazen US rewrite of the TPP First published at... more

Kiwi Success

New Supreme Court and Court of Appeal appointments

13 Jul 2016 Appointments
New Zealand Government Hon Christopher FinlaysonAttorney-General 13 July 2016 New Supreme Court and Court of Appeal ... more

Awards champion public service excellence

7 Jul 2016 People
New Zealand Government   Hon Paula Bennett Minister of State Services 7 July 2016 Awards champion public service... more

Recruitment

Fletcher chases 100 ex-pat Brits

7 Jul 2016 Recruitment By Paul McBeth
Article - BusinessDesk Fletcher chases 100 ex-pat Brits as construction sector faces capacity constraints July 7 (BusinessDesk) -... more

Zero-hour contracts gone, PPL extended

10 Mar 2016 Recruitment
New Zealand Government Hon Michael Woodhouse Minister for Workplace Relations and Safety 10 March 2016 Zero-hour contracts gone, PPL... more

s