Sharechat Logo

NZ dollar, little changed, may fall on technical basis as inflation report looms

Wednesday 18th April 2018

Text too small?

The New Zealand dollar was little changed and is more likely to fall, on a technical basis after failing to punch through its highs for the year. First-quarter inflation figures tomorrow are expected to be supportive of interest rates staying low.

 

The kiwi dollar traded at 73.37 US cents as at 5pm in Wellington from 73.38 cents late yesterday. The trade-weighted index was little changed at 75.17.

 

The kiwi climbed to as high as 73.95 cents on Friday before retreating and failing to break through its highs for the year, a double top of about 74.37 cents. The 200-day moving average is 71.80 cents and the currency is more likely to retreat toward the bottom of its recent trading range of 72 cents to 74 cents, said Grant Bodle, a senior dealer at HiFX.

 

"The down-trend channel is still intact," Bodle said. The kiwi "is more likely to trend back to 72 cents." 

 

There is more scope for the kiwi to decline on a fundamental basis given the Federal Reserve is expected to hike US interest rates twice, and possibly three times more this year, he said. "On fundamentals, the US dollar should strengthen," he said, adding that he was surprised the kiwi didn't sell off on Monday morning following the missile strikes on Syria over the weekend. The lack of reaction was in contrast to another geopolitical risk, when North Korea was testing missiles near Japan and the kiwi fell.

 

Economists expect annual inflation was 1.1 percent in the first quarter, slowing from a 1.6 percent pace three months earlier. That's also the forecast of the Reserve Bank, which is projecting its first rate increase in 2020. The kiwi didn't move much after dairy product prices rose at the Global Dairy Trade auction, gaining for the first time in five events, amid strong demand. The GDT price index increased 2.7 percent and whole milk powder rose 0.6 percent to US$3,311 a tonne. 

 

The kiwi dollar rose to 4.6120 yuan from 4.6086 yuan yesterday when data showed China's economy grew 6.8 percent, year-on-year, in the first quarter, while industrial production grew 6 percent, missing estimates.

 

The local dollar rose to 51.28 British pence from 51.16 pence as figures showed the UK jobless rate was 4.2 percent in February, versus expectations for a rate of 4.3 percent. Average weekly earnings rose 2.8 percent, year-on-year, as expected.

 

The New Zealand dollar traded at 94.43 Australian cents from 94.48 cents yesterday. It traded at 59.24 euro cents from 59.26 cents and rose to 78.70 yen from 78.57 yen.

 

New Zealand's two-year swap rate fell 1 basis point to 2.30 percent and the 10-year swap rate fell 3 basis points to 3.15 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:

QMS pulls out A$35M from NZ unit in MediaWorks merger
Take care to avoid "unnecessary" cost in electrifying economy - Vivid
Is this the calm before a storm of credit card thrashing?
Shrinking meat and dairy product manufacturing weighs on growth outlook
Jon Macdonald to stay on as Trade Me boss through takeover tussle
Shareholders’ Association wants Finzsoft to come clean
A2 rings in more executive changes under new CEO Hrdlicka
NZ dollar dips as China-US trade tensions cast pall over global markets
No end in sight to global market turmoil
MARKET CLOSE: NZ shares rally on speculation of flat US rate track; Spark gains

IRG See IRG research reports