Sharechat Logo

Japanese and US policy the focus of NZ Dollar market this week

Monday 21st January 2013

Text too small?

The New Zealand dollar will struggle to exhibit a clear trend this week with Japanese monetary policy and US budget policy at the top of traders' minds.

The kiwi recently traded at 83.46 US cents from 83.64 cents at 5pm on Friday. It may trade in a range of 81.80 cents to 84.70 cents this week, according to a BusinessDesk survey of four traders and strategists.

"I'm seeing that the uptrend since June last year remains intact as long as 82.00 cents holds," Imre Speizer, senior markets strategist at Westpac, said.

"Momentum has slipped and the kiwi could test just under 83.00 cents," he said, saying he was neutral on direction this week.

Alex Sinton at ANZ is predicting an upward bias for the kiwi this week but says direction is a hard call.

"The Bank of Japan tomorrow is the fly in the ointment," he said.

The Bank of Japan is expected to keep to its plan of stimulating the Japanese economy, which has made the yen weak.

All 23 economists in a Bloomberg News survey expect the central bank to expand asset purchases at a two-day meeting that starts today.

"Most of what they unveil tomorrow will have been priced into the yen and if anything we might get some yen buying once the news is out with people taking profit on short-yen positions," Mr Speizer said.

"Kiwi-yen is really extremely over-bought technically and it's really screaming that it needs to correct at least a few yen," he said.

In the US, the Republican-controlled House of Representatives has signalled that it intends to support a three-month extension of the US debt ceiling.

Bancorp Treasury Services says that this would avert a government debt default in February or March.

The looming US debt ceiling fight was not yet upsetting markets, with US equities touching five-year peaks.

Mr Speizer said a vote on this temporary debt ceiling increase on Wednesday US time may prove to be the most important event for the new Zealand market this week.

"The extension would put off a fight between the Republicans and Obama over a long term ceiling increase until they have negotiated two other fiscal deadlines in the next few months."

With a weaker-than-expected December- uarter New Zealand consumers price index now behind the market, the focus is turning to Australian December-quarter inflation data on Wednesday.

The headline consumers price index is expected to be softer because of weak food prices, but the core rate will be little changed.

A rate cut is expected to be discussed at the next Reserve Bank of Australia board meeting in February and a low core CPI could be a tipping point.

 

NOTE: please be advised to read full articles from Business Desk Website, you will have to pay a subscription fee on their website.

BusinessDesk.co.nz



  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:

NZ dollar holds gains on improved dairy, bank capital outlook
MARKET CLOSE: NZ shares gain; banks rally on Reserve Bank capital decision
NZ dollar rises; bank capital rules less harsh than expected
RBNZ relaxes capital requirements, allows preference shares, extends phase-in
NZ dollar extends gain amid mixed US data, possible trade progress
MARKET CLOSE: NZ shares dip on eve of major regulatory decisions
NZ dollar sees off global headwinds, holds above 65 US cents
NZ dollar holds above 65 US cents; dairy auction prices mixed
Dairy index falls on weaker butter, milk fat demand
MARKET CLOSE: NZ shares join global decline; US tariff move weighs on exporters

IRG See IRG research reports