Dollar outlook: Upward bias likely again for kiwi

The New Zealand dollar may gain this week as buyers return at lower levels while keeping a wary eye on commodity prices, business confidence and the US earnings season.

The kiwi recently traded at 83.66 US cents from 84.25 cents on Friday.

It may trade between 83.00 US cents and 84.70 this week, with a bias to the upside, according to a BusinessDesk survey of four traders and strategists. The range is similar to last week, when the currency traded to 84.61 cents.

"I'm going positive again for the week for the kiwi but I'm less confident of it than last week," says Imre Speizer, senior markets strategist at Westpac Banking Corp.

Iron ore prices reversed on Friday and the Chinese stock market was worth watching this week, he says.

The biggest local statistic is the consumer price index on Friday, expected to come in zero or 0.1 percent for the December quarter, and the NZIER business confidence survey tomorrow will also be of interest.

US earnings will be important for the American stock market but expectations are muted, with the Dow Jones Industrial Average advancing 0.4 percent in the last week, as did the Standard & Poor's 500 Index.

But further gains will be dependent on the read on the economy provided from reports by Goldman Sachs, JPMorgan Chase, Bank of America, Citigroup and Morgan Stanley this week.

Earnings for financial companies in the S&P 500 grew 16 percent in the fourth-quarter, according to data compiled by Bloomberg.

"A lot of the moves last week were down to the Bank of Japan adding a big stimulus to their economy, which was added to on Friday," says Stuart Ive, currency strategist at HiFX.

Alex Sinton, senior dealer at ANZ, says investors are still hungry for the New Zealand dollar and exporters were possibly under-covered.

Talk of people starting to fix mortgage interest rates may also have a positive influence on the kiwi.

The yield at the long end of the New Zealand interest rate curve may rise if there is a flood of people fixing mortgage rates as banks seek to protect themselves. The higher yield will attract investors to the kiwi, Mr Sinton says.

(BusinessDesk)

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NZ Market Snapshot

Forex

Sym Price Change
USD 0.7740 -0.0003 -0.04%
AUD 0.9511 0.0005 0.05%
EUR 0.6324 -0.0002 -0.03%
GBP 0.4954 0.0001 0.02%
HKD 6.0039 0.0001 0.00%
JPY 92.5100 -0.0050 -0.01%

Commods

Commodity Price Change Time
Gold Index 1195.4 -2.890 2014-12-19T00:
Oil Brent 61.4 1.580 2014-12-19T00:
Oil Nymex 57.1 2.910 2014-12-19T00:
Silver Index 16.0 0.096 2014-12-19T00:

Indices

Symbol Open High Last %
NZX 50 5518.5 5545.0 5539.3 -0.21%
NASDAQ 4752.6 4782.1 4748.4 0.36%
DAX 9901.3 9901.3 9811.1 -0.25%
DJI 17778.0 17874.0 17778.2 0.15%
FTSE 6466.0 6566.9 6466.0 1.23%
HKSE 23158.3 23189.6 22832.2 1.25%
NI225 17511.0 17621.4 17210.0 2.39%