Kiwi dollar heading for fall this week

The New Zealand dollar is headed for a 1 per cent slide against its US counterpart this week as investors see improving prospects there but potential headwinds here.

The kiwi was trading at US67.61c from US67.60c on Thursday. The trade-weighted index was at 73.18 from 73.20.

Martin Rudings, private client manager at OMF, said views on the direction of the US economy remain mixed.

But he said recent weak data here, prospects for a flat December quarter CPI figure next week, and the risks that Reserve Bank changes to bank capital requirements may slow growth, are all weighing on the kiwi.

“I still see the kiwi coming off and that’s just because of a stronger US dollar going forward,” he said. “I still don’t see a recession in the US.”

The kiwi was at 52.12 British pence from

52.50 pence. It was at 94.01 Australian cents from 94.31 cents. It fell to 73.19 Japanese yen, from 73.60 yen, to 59.32 euro cents from

59.34 cents, and was at 4.5820 Chinese yuan from 4.5729 yuan.

Rudings is not convinced the US will lift tariffs on China’s goods. But if it did that would be positive for both the kiwi and Aussie.

That officials are even considering it is potentially positive, he said, but also a signal that they feel the impasse is so great that the only way to make progress is to lift the tariffs.

“It does tell us that the impasse is quite large — it’s a meaningful impasse.”

While international events will set the kiwi’s direction, Rudings said there appears to be a shift in thinking about growth and the prospects for interest rate cuts here this year.

The New Zealand two-year swap rate rose

3 basis points to 1.89 per cent while the

10-year swap rate rose 4 basis points to from

2.595 per cent.