NZ dollar heads for 1.7% weekly gain as oil prices slow slide; US payrolls loom

Friday 9th January 2015

The New Zealand dollar is heading for a 1.7 percent weekly gain as the recent decline in oil prices took a breather, prompting investors to wind back their support for the greenback ahead of US employment figures.

The kiwi rose to 78.33 US cents at 5pm in Wellington from 77.02 cents on Friday in New York last week, and was up from 78.17 cents at 8am and 77.93 cents yesterday. The trade-weighted index is heading for a 0.8 percent weekly gain to 79.98 from 79.35 last week, and up from 79.74 yesterday.

A BusinessDesk survey of seven traders, strategists and brokers predicted the kiwi would trade between 75.50 US cents and 78.50 cents this week, with five picking the currency to fall, one expecting it to remain relatively unchanged and one betting it would rise.

The US dollar index, which measures the greenback against a basket of currencies, has been holding near nine-year highs this week as falling oil prices keep a lid on already tepid global inflation, and sapped demand for risk-sensitive assets. At the same time the euro has been under pressure on heightened speculation the European Central Bank will have to print money to fight deflation.

"Oil has been getting smashed and it's ready to rip - our feeling is the market's found a bit of a low and is due a bounce," said Mitchell McIntyre, corporate FX dealer at NZ Forex in Auckland. "Everyone in the market's taking a bit of a breather, and the kiwi's just drifting a little bit higher."

Traders are waiting on US non-farm payrolls figures on Friday in Washington to gauge the pace of recovery in the world's biggest economy, with the Federal Reserve looking likely to start unwinding its zero interest rate policy this year.

New Zealand government data today showed the pace of new building permit issuance rose to a seven-year high in November, with rebuilding activity in Christchurch and a shortage of housing in Auckland driving consenting.

The kiwi increased to 96.20 Australian cents at 5pm in Wellington from 96.04 cents yesterday after Bureau of Statistics data showed retail sales rose just 0.1 percent in November from a month earlier, falling short of expectations.

The local currency gained to 4.8626 Chinese yuan from 4.8472 yuan yesterday after official figures showed Chinese consumer prices rose an annual 1.5 percent in December, meeting expectations.

The kiwi climbed to 66.34 euro cents, near a two-and-a-half year high, from 65.89 cents yesterday, and increased to 51.89 British pence from 51.66 pence. It advanced to 93.61 yen from 93.26 yen yesterday.

The two-year swap rate rose to 3.82 at 5pm in Wellington from 3.79 yesterday, while the 10-year swap rate increased to 3.99 from 3.965.

BusinessDesk.co.nz

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