Sharechat Logo

NZ dollar heading for 1.2% weekly decline as US dollar remains in favour

Friday 18th May 2018

Text too small?

The New Zealand dollar is heading for a 1.2 percent weekly decline as rising US Treasury yields continue to stoke interest in the greenback. 

The kiwi dollar traded at 68.84 US cents as at 5pm in Wellington versus 69.05 cents late yesterday and down from 69.66 cents in New York a week ago. The trade-weighted index traded at 72.26 from 72.30 yesterday.

U.S. benchmark 10-year yields hit a high of 3.128 percent in early Asian trade on Friday, the highest since July 2011, on growing optimism about the US economy and expectations that the US Federal Reserve will raise interest rates at least two more times this year. The US 10-year bond yield has lifted around 15 basis points this week putting it on track for its largest weekly gain in three months, according to Reuters. The kiwi, on the other hand, continues to be weighted down by the prospect of interest rates staying at record low levels at least until late 2019 or early 2020. 

Tim Kelleher, head of institutional foreign exchange sales at ASB Bank, said the kiwi has solid resistance around 67.80 US cents to 68.25 US cents and "I would have thought it will have trouble getting through there at least on the first attempts," he said.

He said the kiwi is finding some support on exporter buying "which isn't surprising given that it's around five-month lows." The local dollar last traded at these levels in December 2017. 

Given a dearth of domestic and international data on the immediate horizon, Kelleher said the kiwi will be pushed around by offshore sentiment, in particular around the US-China trade talks. 

The kiwi traded at 91.63 Australian cents from 91.61 cents yesterday. The kiwi dollar traded at 4.3840 yuan from 4.3907 yuan. It was largely unchanged at 50.96 British pence from 50.97 pence and slid to 58.32 euro cents from 58.40 cents. The kiwi traded at 76.34 yen from 76.14 yen.

New Zealand's two-year swap rate was unchanged at 2.22 percent while 10-year swaps lifted 3 basis points to 3.27 percent.

(BusinessDesk)

  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

MARKET CLOSE: NZ shares fall as investor uncertainty weighs on exporters; F&P Health, A2 drop
NZ dollar drops below US68c on plan to up bank capital
Noel Leeming fined $200,000 for misleading consumers
Big four banks face stiffer capital requirements from RBNZ
Infratil signals A$50m investment in Canberra Data Centres
Govt provides $2.5 mln to develop Opotiki aquaculture
Labour co-ordinator role may alleviate kiwifruit labour shortage
NZ manufacturing activity chugs along in November
Australia's GWA lobs in $118M bid for Methven
Govt leaves door open for higher emissions price cap

IRG See IRG research reports