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

A democratic path forward to mandate a plan for #Brexit

26 Jun 2016 Opinion
Opinion - Alastair Thompson   A democratic path forward to mandate a proper plan for #Brexit - a proposal. By Alastair ... more

Minister to attend WW1 commemorations in Europe

24 Jun 2016 News
New Zealand Government Hon Anne Tolley Minister for Social Development 24 June 2016 Media Statement Minister to attend WW1... more

Business

NZ stocks turn as referendum result keeps investors guessing

24 Jun 2016 Business News
Article - BusinessDesk NZ stocks turn as UK referendum result keeps investors guessing By Paul McBeth June 24 (BusinessDesk) - New... more

NZ dollar drops vs. Australian dollar

7 Jun 2016 Business News By Johnathan Underhill
Article - BusinessDesk NZ dollar drops vs. Australian dollar on lack of RBA rate cut By Jonathan Underhill June 7 (BusinessDesk) -... more

Living

The Infinite Air: new book about Jean Batten celebrates NZ aviator's life

27 Jun 2016 Arts
** WIN one of two copies of the novel - visit our Competitions page for more details ** JEAN BATTEN was born in New Zealand in 1909,... more

INTERVIEW: NZ electronica pioneers Pitch Black in London

27 Jun 2016 Entertainment By Charlotte Everett
Pioneers of New Zealand's electronica scene, Pitch Black are celebrating the impending anniversary of their inaugural... more

Property

Record annual profit for Kiwi Property

16 May 2016 Property
By Jonathan Underhill May 16 (BusinessDesk) - Kiwi Property Group, the country's biggest listed property investor by market value,... more

Record annual profit for Kiwi Property

16 May 2016 Property
Portfolio gain, rental income growth delivers record annual profit for Kiwi Property By Jonathan Underhill May 16 (BusinessDesk) -... 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

More funding for the New Zealand Cycle Trail

3 Jun 2016 Travel & Tourism
New Zealand Government   Rt Hon John Key Prime MinisterMinister of Tourism 3 June 2016 More funding for the New Zealand... more

Jucy plans to expand pod-style hotel chain to Australia

16 May 2016 NZ Tourism
Article - BusinessDesk Monday 16 May 2016 12:20 PM Jucy plans to expand pod-style hotel chain to Australia in 2017 By Fiona... more

Sport

Misfortune strikes All Blacks centre Moala

26 Jun 2016 Rugby By Daniel Gilhoolyd
more

Richie McCaw: 148

22 Jun 2016 Sport
Upstart Press   Richie McCaw: 148 148 tests 131 wins 110 times captain of the All Blacks 2 Rugby World Cup triumphs 12... more

Columns

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

Gordon Campbell on Muhammad Ali

7 Jun 2016 Opinion By Gordon Campbell
As with Bob Dylan, Muhammad Ali changed the times in which he lived so thoroughly that anyone coming along afterwards will probably... more

Kiwi Success

New Ambassador to Belgium named

23 Jun 2016 Appointments
New Zealand Government Hon Murray McCully Minister of Foreign Affairs   23 June 2016 Media Statement New Ambassador to Belgium... more

New appointments to Vulnerable Children’s Board

12 May 2016 Appointments
New Zealand Government Hon Anne Tolley Minister for Social Development 12 May 2016 New appointments to Vulnerable Children’s... more

Recruitment

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

Scheme helping to staff hard to fill positions

28 Feb 2016 Recruitment
New Zealand Government Scheme helping to staff hard to fill positions Health Minister Jonathan Coleman says an incentive scheme... more

s