Dollar slips against Aussie
Woolworths edgy about Amazon
The NZ dollar fell against its Australian counterpart as surging prices for iron ore and other hard commodities overshadowed the recovery in dairy prices.
The kiwi slipped to A94.39 cents at 5pm yesterday from A94.62c and is heading for a 1.2 per cent weekly decline. The kiwi rose to US70.19c from US69.80c on Thursday, when it touched US69.68c, the lowest since July.
Prices for iron ore, Australia’s biggest commodity export, have gained about 12 per cent since Donald Trump won the US presidency on November 8, while copper has made similar gains and coking coal has been advancing.
While prices of dairy products are also gaining, with the GDT Price Index up 4.5 per cent at the last GlobalDairyTrade auction, that was slower than the 11 per cent gain at the previous auction and less than some in the market were expecting.
The kiwi has failed to push lower than US70c, which traders attribute to options maturities with strike prices around that level, and gained yesterday amid news that US Green Party presidential candidate Jill Stein is closing in on the fundraising she needs to request a vote recount in three states.
“Kiwi- Aussie has been a relative commodities story. Base metals have been supporting the Australian dollar pretty strongly,” said Graham Parlane, private client manager at OMF. If Stein was successful in overturning the narrow win for Trump in Wisconsin, Michigan and Pennsylvania, “you would have a different President”, although her chances of success aren’t rated highly by the market, he said.
The kiwi has declined more than 5 per cent against the greenback since Trump’s victory, which heralds a new policy direction for the US that would include tax cuts and massive infrastructure spending, driving US economic growth, inflation and interest rates. Against that, he has vowed to ditch the Trans- Pacific Partnership agreement and enact trade policies that could have negative implications for trading nations such as New Zealand.
The kiwi didn’t move much after figures showed New Zealand’s trade deficit was $ 846 million in October, from $ 1.4 billion last month and $ 905 million in October 2015. Statistics NZ said the annual trade gap narrowed to $ 3.297b from $ 3.356b in September.
The trade- weighted index rose to 77.30 from 77.15. The kiwi rose to 56.28 British pence from 56.11p late on Thursday and traded at
66.30c from 66.26c. It rose to 4.8474 yuan from 4.8285 yuan and gained to ¥ 79.57 from ¥ 78.68.
The two- year swap rate fell 1 basis point to 2.23 per cent and the 10- year swap rate was unchanged at 3.28 per cent. Woolworths is treating the potential arrival of online retail giant Amazon in Australia as a real threat, setting up a special team to deal with the new competitor.
AmazonFresh, the online supermarket subsidiary of the American e- commerce company, i s reportedly planning to launch in Australia as early as next year.
Woolworths chairman Gordon Cairns revealed the group has set up a team to look at the Amazon “threat”.
“We didn’t want to distract people in the supermarket business worrying about how to compete with Coles and Aldi today [ with] worrying about Amazon so we have set up a separate unit,” Cairns told the group’s annual general meeting on Thursday.
He said US retail expert Kathryn Tesija, a director on the Woolworths board, has been providing coaching and insights.
The former US Target executive told shareholders that Amazon was a real threat.
“It is a formidable competitor. It will be someone we will take seriously,” Tesija said.
Woolworths has the advantage of being an entrenched player in the supermarket business, she said.
“Woolies has a number of stores and the best locations in major cities in the country; and they built that over 91 years which Amazon can’t replicate anytime soon.”