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NZ Dollar Outlook Kiwi may fall as risk appetite fades, Oz economy in focus

Monday 4th March 2013

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The New Zealand dollar may fall in a week that will be punctuated by central bank meetings, Australian data and US non-farm payrolls, and as risk appetite abates.

The kiwi recently traded at 82.11 US cents, down from 82.42 cents in late New York Trade on Friday. It will trade in a range of 80.50 cents to 83.50 cents this week, with all five strategists and traders in a BusinessDesk survey calling it lower.

The Dollar Index, which measures the greenback against a basket of major currencies, has reached its highest level since August last year, typically a sign that more investors are eschewing risk in favour of the world's reserve currency.

The Reserve Bank of Australia, People's Bank of China, European Central Bank, Bank of England and Bank of Japan all make their policy decisions this week, while US non-farm payrolls round out the week's events and the uncertain Italian election outcome remains in focus.

"The world's decided everything has become a little bit too hard so we will bail on risk," said Peter Cavanaugh, senior client adviser at Bancorp Treasury Services. "That was exacerbated at the end of the week with the US dollar gaining against everything."

Australia's central bank reviews monetary policy tomorrow and is expected to keep the cash rate unchanged at 3 percent. The RBA's statement will round out a busy day for Australian data, with the balance of payments for the fourth quarter, and retail sales for January.

Wednesday sees the release of fourth-quarter Australian gross domestic product, expected to have sped to 0.6 percent from 0.5 percent three months earlier. Australia's trade balance for February is out Thursday.

The kiwi dollar recently traded at 80.75 Australian cents from 80.80 cents on Friday.

On Thursday the BOJ, BOE and ECB release their policy decisions. Japan's central bank is expected to stand pat as it prepares for the change of governor, as may the Bank of England.

US payrolls for February is expected to show the US economy added 150,000 jobs last month, down from 157,000 the previous month, while the jobless rate held unchanged at 7.9 percent.

Imre Speizer, senior markets strategist at Westpac Banking Corp, said he sees "further weakness down to 81 cents over the week, mainly on the back of offshore news."

"Last week was the first unwinding of long positions of kiwi in quite a while," he said.

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