Kiwi may extend drop against $A as iron ore prices gain, China recovers

The New Zealand dollar may extend its decline against its transTasman counterpart as Australia's currency rallies on rising commodity prices and the prospect of a stronger Chinese economy.

The kiwi fell to 79.17 Australian cents at 5pm in Wellington from 79.35 cents on Friday in New York. It traded at 82.94 US cents from 83.02 cents at 8am and 83.13 cents last week.

Australia's dollar may rally this week as government figures on Wednesday are expected to show consumers lifted their spending 0.3 percent in November from a month earlier, according to a Bloomberg survey, and as Chinese indicators show the world's second biggest economy may not face as steep a slowdown as initially feared.

The price of iron ore has climbed about 70 percent in the past four months as Chinese demand for the metal returns.

"Australian retail sales this week should be slightly better than expected, and Chinese data should boost the Aussie dollar more than the kiwi," says Imre Speizer, market strategist at Westpac Banking Corp in Auckland. The New Zealand dollar may extend its decline to 78.75 Australian cents "as the Aussie outperforms", he says.

New Zealand's currency may gain against the greenback this week as traders resume regular service after the abbreviated Christmas and New Year trading weeks after US policymakers got over their partisan differences to reach agreement on the fiscal cliff of $US600 billion in legislated spending cuts and tax increases.

It may trade in a range of 81.80 cents to 84.70 cents this week, with a bias to the upside, according to a BusinessDesk survey of five traders and strategists.

The kiwi traded at 63.54 euro cents at 5pm in Wellington from 63.58 cents on Friday in New York, and was little changed at 51.69 British pence from 51.77 pence last week.

It fell to 73.05 yen from 73.29 yen last week, and the trade-weighted index slipped to 74.88 from 74.99 on Friday.

(BusinessDesk)

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1 Comment & Question

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What a load of Keynesian twaddle!

Consumer spending is said in the media to be the be all and end all for economic growth. It is merely an indicator, and a poor one at that.
China has a hugely distorted economy and an enormous housing bubble that needs to burst. When that goes what do you think will happen to your precious iron ore prices?
The Chinese economy is importing inflation from the US by buying treasuries that are eternally falling in real value terms. One day Chinese people will buy their own goods, but that day will only come when China stops buying US bonds.
The fiscal cliff was a smoke n mirrors campaign. It shows only one thing: USA will never bite the bullet and pay back its debts via taxes and will only monetising them - ie, pay back in nominal terms only. Next up is a debt ceiling show guaranteed to result in a last-minute increase again.

NZ is in a decent position, considering we produce food, and people will eat before they buy a new car. But we are a bit threatened by unfunded liabilities such as ACC, superannuation and everything the WINZ Office does.

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NZ Market Snapshot

Forex

Sym Price Change
USD 0.7902 0.0042 0.53%
AUD 0.9095 -0.0021 -0.23%
EUR 0.6359 0.0093 1.48%
GBP 0.5044 0.0034 0.68%
HKD 6.1310 0.0346 0.57%
JPY 93.1140 0.1720 0.19%

Commods

Commodity Price Change Time
Gold Index 1193.4 -0.480 2014-11-20T00:
Oil Brent 78.7 -0.130 2014-11-20T00:
Oil Nymex 75.8 1.320 2014-11-20T00:
Silver Index 16.1 -0.150 2014-11-20T00:

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Symbol Open High Last %
NZX 50 5526.9 5526.9 5526.9 -0.56%
NASDAQ 4655.2 4703.0 4675.7 0.56%
DAX 9521.2 9668.6 9484.0 1.59%
DJI 17677.3 17720.4 17685.7 0.19%
FTSE 6678.9 6738.9 6678.9 0.78%
HKSE 23353.7 23508.0 23349.6 0.37%
NI225 17285.7 17381.6 17300.9 0.33%