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

ANZAC 2015 in pictures

25 Apr 2015 News
NZ News UK attended several ANZAC ceremonies in Auckland today. These photos were taken at the Northcote Community where the... more

ANZAC 2015: Anzac Messages, NZ Prime Minster and Governor-General

24 Apr 2015 News
Anzac Day 'We will remember them'   Anzac Day 2015 – Message from the Governor-General of New Zealand On 25 April every... more

Business

Mercer's CEO Shepherd, CFO Blathwayt quit the manufacturer

24 Apr 2015 Business News
Article - BusinessDesk   Mercer's CEO Shepherd, CFO Blathwayt quit the manufacturer By Suze Metherell April 24 (BusinessDesk) -... more

Oracle-owned boatbuilder has had two government grants

23 Apr 2015 Business News By Fiona Rotherham
  Oracle-owned boatbuilder has had two government grants in three years April 23 (BusinessDesk) - Core Builders Composites,... more

Living

Britain remembers the ANZACs - 100 years on

25 Apr 2015 ANZAC By Charlotte Everett
100 years after allied forces landed in Gallipoli, 25 April – ANZAC Day – has been commemorated in the UK officially for... more

A Kiwi's guide to ANZAC in Europe - our list of events across the UK, Ireland and beyond

24 Apr 2015 ANZAC By Charlotte Everett
Tomorrow marks the 100th ANZAC Day, and if you are a Kiwi or Aussie far from home there are plenty of events on to enable you both to... more

Property

New process for red zone Crown offers

21 Apr 2015 Property
Canterbury Earthquake Recovery Minister Gerry Brownlee has announced a process to give everyone a say on the Crown offers to... more

NZ house prices rise 8% in March, led by 13% Auckland jump

14 Apr 2015 Property By Tina Morrison
April 14 (BusinessDesk) - New Zealand residential property prices rose in March, led by Auckland where housing supply isn't meeting... more

Migration

NZ migration hits new annual record in March

23 Apr 2015 Migration By Tina Morrison
April 23 (BusinessDesk) - New Zealand migration hit a new annual record in March, as more students arrived from India and China and... more

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

Travel

Air NZ's Houston link paves way for United Airlines tie-up

17 Apr 2015 Travel & Tourism By Fiona Rotherham
  Air NZ's Houston service paves the way for partnership with United Airlines, analysts say April 17 (BusinessDesk) - Air New... more

Wellington Airport revised fees 'just within' OK range

17 Apr 2015 Travel & Tourism By Tina Morrison
  Wellington Airport's revised fees are 'just within' acceptable range of returns, regulator says April 17 (BusinessDesk) -... more

Sport

Price and Wesko Nail the Dressage at Kentucky

25 Apr 2015 Equestrian
Kiwi eventer Tim Price and Wesko have delivered their best-ever dressage score to sit at the front of the field this morning at the... more

ISAF Sailing World Cup Hyeres

25 Apr 2015 Sailing
ISAF Sailing World Cup Hyeres: Burling and Tuke still lead, one more day of fleet racing At the end of day three at ISAF Sailing ... more

Columns

Gordon Campbell on the hair-pulling finale and Gallipoli

24 Apr 2015 Column
  Gordon Campbell on the hair-pulling finale, and the real hero of Gallipoli Don’t know about you, but when hi-jinks and... more

Gordon Campbell on UE pass rates & university dropout rates

14 Apr 2015 Opinion
Houston, there is clearly a problem with (a) the plunge in pass rates for University Entrance qualifications, which has been ... more

Kiwi Success

Fonterra reshuffles management team

24 Apr 2015 Appointments By Fiona Rotherham
  Fonterra reshuffles management team to speed up value-add strategy April 24 (BusinessDesk) - Fonterra Cooperative Group, the... more

TVNZ and RNZ appointments announced

23 Apr 2015 Appointments
New Zealand Government TVNZ and RNZ appointments announced Broadcasting Minister Amy Adams today announced the appointment of Sussan... more

Recruitment

Apprenticeship scheme launched

18 Apr 2015 Recruitment
The He Toki ki te Mahi Apprenticeship Training Trust was launched by Prime Minister, the Rt Hon John Key at Rehua Marae in ... more

Chinese rail workers must be paid minimum wage

17 Apr 2015 Recruitment
KiwiRail must immediately stop further Chinese engineers from working here until they can guarantee they are being paid the New... more