NZ dollar heads for 0.2% weekly decline 1 May 2015
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NZ dollar heads for 0.2% weekly decline as markets eye central banks
By Paul McBeth
May 1
(BusinessDesk) - The New Zealand dollar is heading for a 0.2
percent weekly decline against the greenback as markets
digest the Reserve Bank's formal shift to an easing bias,
and ahead of next week's monetary policy review in
Australia.
The kiwi slipped to 75.87 US cents at 5pm in Wellington from 76.05 cents last Friday in New York, down from 76.31 cents at 8am and 76.17 cents yesterday. The trade-weighted index dropped to 78.34 from 78.41 yesterday, and is heading for a 0.7 percent weekly decline.
Investors are assessing the prospects of
lower rates in Australia and New Zealand as tepid inflation
provides scope for the nations' respective central banks to
keep stimulating their economies with lower rates. New
Zealand's Reserve Bank kept its key rate at 3.5 percent on
Thursday, while opening up the possibility of a rate cut if
inflationary pressures come in below expectations, while
traders are pricing in a 62 percent chance of a cut by the
Reserve Bank of Australia when it reviews its policy on
Tuesday.
"If they were to cut, markets would probably
look at Australia and increase the probability that the RBNZ
follows through on its tonal shift, just because they're our
largest trading partner," said Sam Tuck, senior FX
strategist at ANZ Bank New Zealand in Auckland. "I doubt it
would be massive," he said, referring to the impact on the
kiwi if the RBA cuts.
Tuck said the greenback is being
supported by some stronger than expected wage data in the US
despite the downturn in economic activity, and investors
will be closely watching next week's non-farm payrolls for a
gauge on the strength of the world's biggest
economy.
New Zealand employment data next Wednesday
will also be watched after Reserve Bank governor Graeme
Wheeler name-checked wages as one of the inflation
components the bank is monitoring.
New Zealand Finance
Minister Bill English today said the government's quest to
reach an operating surplus had become more challenging, and
that the low interest rate environment and tepid inflation
was expected to strip out $4.5 billion from its tax-take
over the next four years.
Meantime, Quotable Value
figures showed New Zealand's property values accelerated at
their fastest annual pace in 12 months in April, with the
limited available housing stock in Auckland continuing to
drive up prices.
The local currency rose to 96.11
Australian cents at 5pm in Wellington, from 95.22 cents
yesterday, and fell to 4.7047 Chinese yuan from 4.7224 yuan
yesterday. It rose to 90.74 yen from 90.35 yen yesterday,
and declined to 67.67 euro cents from 68.57 cents. The kiwi
was little changed at 49.42 British pence from 49.38 pence
yesterday.
New Zealand's two-year swap rate declined
to 3.47 at 5pm in Wellington from 3.48 yesterday, and the
10-year swap rate increased to 3.86 from 3.82
yesterday.
(BusinessDesk)
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