NZ dollar holds ground against weaker greenback on expectations of upbeat business confidence

Tuesday 8th April 2014

The New Zealand dollar held its ground against a declining US dollar ahead of a business confidence survey today which is likely to show continued momentum in the local economy.

The kiwi edged up to 86.03 US cents at 8am in Wellington from 85.92 cents at 5pm yesterday. The trade-weighted index was little changed at 80.33 from 80.31 yesterday.

The US dollar index, which measures the greenback against a basket of currencies, continued its decline after a key employment measure published on Friday failed to meet the upbeat expectations of some investors. The kiwi bucked the trend ahead of the New Zealand Institute of Economic Research Quarterly Survey of Business Opinion which is expected to reinforce expectations that more interest rate hikes are on the way to stem inflation pressures emerging from the strengthening local economy.

"Business opinion is the focus today," ANZ Bank New Zealand senior economist Mark Smith and senior foreign exchange strategist Sam Tuck said in a note. "There is likely to be little in this morning's New Zealand Q1 QSBO survey that will stand in the way of the continued withdrawal of monetary stimulus by the RBNZ, with the survey expected to confirm a broadening in the domestic expansion."

The Reserve Bank hiked the benchmark interest rate last month and is expected to raise the rate again this month to prevent inflation accelerating. The QSBO survey is scheduled for release at 10am local time.

The kiwi is likely to trade between 85.50 US cents and 86.30 cents today, ANZ said.

The New Zealand dollar advanced to 92.82 Australian cents from 92.63 cents yesterday ahead of an Australian report on business confidence and conditions. The NAB survey is scheduled for release at 1:30pm New Zealand time.

The local currency slipped to 62.59 euro cents from 62.71 cents yesterday after investors pared back their bets that the European Central Bank may introduce more stimulus to support the region's economy and bolster inflation.

ECB policymaker Ewald Nowotny said there was no need to act immediately to counter Eurozone disinflation, and colleague Yves Mersch said that while the central bank was drawing up plans for large-scale asset purchases, it remained some way off.

The kiwi edged up to 88.66 yen from 88.57 yen yesterday amid speculation about whether the Bank of Japan will introduce more monetary stimulus at the conclusion of its two-day policy meeting today.

The New Zealand dollar slipped to 51.78 British pence from 51.84 pence yesterday ahead of reports on UK industrial and manufacturing production and a March estimate of UK GDP.

BusinessDesk.co.nz

Comments from our readers

No comments yet