Dollar heads for 1% weekly gain as risk appetite flourishes, US jobs report looms
The New Zealand dollar is heading for a 1 percent weekly gain amid revived investor appetite for high-yielding, or riskier, assets as the Ukraine tensions eased, and ahead of US jobs figures which will likely be hit by the harsh winter conditions.
The kiwi rose to 84.76 US cents at 5pm in Wellington from 83.89 cents at the close of trading in New York last week. It traded at 84.84 cents at 8am, up from 84.22 cents yesterday. The trade-weighted index rose to 79.26 from 79.08 yesterday, and is heading for a 0.6 percent weekly gain from 78.81 last week.
Eleven traders and strategists surveyed by BusinessDesk on Monday predicted the local currency would trade between 81.80 US cents and 85 cents this week. Five expected the local currency to fall, three picked it to advance while three said it would likely be little changed.
The local currency rallied this week as tensions between Russia and Western democracies eased after Russian President Vladimir Putin backed off threats to immediately annex the Crimean Peninsula. Meantime, US economic figures have been weaker than expected due to the harsh winter conditions. Traders are waiting for February's non-farm payrolls report today in Washington, which is expected to show the world's biggest economy added 150,000 jobs that month.
"It's more broad-based US dollar weakness rather than kiwi strength," said Sam Tuck, senior FX strategist at ANZ New Zealand in Auckland. "The way we've held up is pretty decent" and the kiwi may test 85 US cents, though "a lot depends on the payrolls number."
ANZ's Tuck said the kiwi may trade between 84.60 US cents and 85.40 cents over the next 24 hours.
The kiwi dollar fell to 93.22 Australian cents from 93.40 cents yesterday after Reserve Bank of Australia governor Glenn Stevens told politicians he doesn't need to cut interest rates any further. The bank kept the key rate at 2.5 percent this week, and Australian data has surprised on the upside with stronger than expected retail sales, trade figures and economic growth.
Investors are eyeing next week's Reserve Bank of New Zealand rate review, where governor Graeme Wheeler is expected to start lifting interest rates to head of the threat of future inflation. Traders have priced in a 98 percent chance of a hike at the meeting, according to the Overnight Index Swap curve.
ANZ's Tuck said much of the rate hike will have been priced into the market, though investors can't benefit until interest rates have actually increased.
"You're going to get more people investing at the higher level once the rates have hiked," he said.
The kiwi dollar decreased to 61.14 euro cents from 61.36 cents yesterday, and gained to 50.62 British pence from 50.39 pence. It climbed to 87.22 yen from 86.45 yen yesterday.