The New Zealand dollar may be ripe for a turnaround after falling over the past month, with local data this week expected to show the labour market in good heart and while the latest dairy auction may show resilient global dairy prices.
The kiwi dropped 1.5 per cent against the greenback in April and was trading near a 10-month low at 68.56 US cents at 5pm in Wellington from 68.66 cents on Friday in New York. The trade-weighted index fell 1.5 per cent in April and declined to 74.51 from 74.72 last week.
The local currency has been under pressure as heightened geopolitical tensions stoked investors' demand for safe-haven currencies, while the mounting prospect of greater trade barriers was seen weighing on the kiwi and New Zealand's trading ambitions. That's seen a build up in traders taking short positions against the kiwi, betting the currency will decline. That comes ahead of a GlobalDairyTrade auction and employment figures on Wednesday which will likely show dairy prices are still firm and jobs growth remains robust.
See live rates for the NZ-US $ below. Click for more information:
AdvertisementAdvertise with NZME.
"The employment numbers will be a particularly interesting read and if they get some strong numbers you'll see the kiwi bounce up," said Michael Johnston, a senior dealer at HiFX in Auckland. "It could nudge up to 70 (US cents)" although Johnston said he still expects the kiwi will fall over the medium- to long-term.
Trading was relatively quiet in Monday trading with parts of Asia and Europe closed for the May Day and Labour Day holidays.
Investors are awaiting the Federal Reserve's policy review later this week and a speech from Fed chair Janet Yellen on Friday, ahead of US non-farm payrolls data on Friday in Washington.
New Zealand's two-year swap rate edged up 1 basis point to 2.28 per cent, and 10-year swaps were unchanged at 3.36 per cent.
The kiwi traded at 91.62 Australian cents from 91.63 cents last week ahead of tomorrow's Reserve Bank of Australia policy review and slipped to 4.7231 Chinese yuan from 4.7307 yuan last week in the lead-up to Chinese manufacturing data.
The local currency was little changed at 76.53 yen from 76.58 yen last week and 62.94 euro cents from 63 cents. It traded at 53.10 British pence from 53 pence last week.