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Business Recorder
3 days ago
- Business
- Business Recorder
Australia, NZ dollars take collateral damage from Mideast conflict
SYDNEY: The Australian and New Zealand dollars slid on Thursday as concerns the United States was inching closer to striking Iran dampened risk sentiment, while domestic data was too mixed to offer much direction. The Aussie, often used as a proxy for risk assets, lost 0.4% to $0.6482, reversing its overnight bounce from $0.6470. Resistance lies at the recent seven-month top of $0.6552, with major support at $0.6456 and $0.6408. The kiwi dollar eased 0.7% to $0.5988, breaking support at $0.5996 and threatening a retreat to $0.5944. In Australia, data showed employment fell by 2,500 in May, when analysts had looked for a rise of 22,500. Australia, New Zealand dollars attempt to steady after sell-off, Fed decision looms The details were stronger with the jobless rate steady at 4.1%, while full-time jobs and hours worked both jumped. Markets slightly trimmed the chance of a July rate cut from the Reserve Bank of Australia to 64%, from 70% before the data. A quarter-point reduction in the 3.85% cash rate is still fully priced for August and rates are seen bottoming between 2.85% and 3.10% by early next year. 'In our view, the labour market is no longer 'tight' and isn't contributing to wage pressures or inflation,' said Andrew Boak, an economist at Goldman Sachs. 'We continue to expect the RBA to cut 25bp at its next meeting in July, followed by cuts in August and November to a terminal rate of 3.1%.' In New Zealand, figures showed the economy grew 0.8% in the first quarter, just pipping forecasts of 0.7%, thanks mainly to a rebound in consumer spending after a couple of tough years. That was twice the 0.4% gain projected by the Reserve Bank of New Zealand and reinforced the case against a rate cut in July, which is priced at just 17%. 'With the economy regaining its footing sooner than expected after last year's sharp downturn, we continue to expect that the RBNZ will take the opportunity to pause and assess the situation at its July review,' said Michael Gordon, a senior economist at Westpac. The market implies around a 60% chance of a quarter-point cut to 3.0% in August and is fully priced by November, though that is seen as the end of the cycle.
Business Times
3 days ago
- Business
- Business Times
New Zealand's economic recovery gathers pace as exports jump
[WELLINGTON] New Zealand's economic recovery from a 2024 recession gathered pace in the first quarter as the central bank lowered interest rates and exports surged. Gross domestic product rose 0.8 per cent in the three months to March, accelerating from a downwardly revised 0.5 per cent growth in the fourth quarter, Statistics New Zealand said on Thursday (Jun 19) in Wellington. The result was slightly better than the 0.7 per cent growth expected by economists. While the economy is still smaller than it was a year ago, its recovery will be welcomed by the government as it makes growth a key priority ahead of a 2026 election. That ambition is being tested by the uncertainty arising from global trade tensions, which is damping spending and investment and raising concerns that the expansion may weaken. 'Repair of the economy is underway but significant risks are apparent,' said Nick Tuffley, chief economist at ASB Bank in Auckland. 'Data since March suggest a sizeable deceleration in economic activity. Geopolitical deterioration in the Middle East presents upside risks to inflation and therefore pricing behaviour.' The New Zealand dollar was little changed after the GDP report, buying 60.29 US cents at 11.30 am in Wellington. The yield on two-year government bonds rose two basis points to 3.44 per cent. RBNZ easing Buoying the economy, farm production improved in the quarter while food manufacturing also lifted, the statistics agency said. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Taken together with high global commodity prices, that has seen a boost to rural incomes and growth in the regions, even as the cities have been encumbered by a sluggish housing market and cautious consumers. Lower interest rates are expected to underpin steady growth in 2025 even as the Reserve Bank of New Zealand (RBNZ) hints it may be nearing the end of its easing cycle. The central bank has cut the Official Cash Rate (OCR) aggressively, reducing the benchmark by 225 basis points since August to 3.25 per cent. Still, last month it removed an explicit easing bias ahead of its July decision. Investors no longer see much chance of the OCR falling below 3 per cent this year, swaps data show. 'With the economy regaining its footing sooner than expected after last year's sharp downturn, we continue to expect that the RBNZ will take the opportunity to pause and assess the situation at its July OCR review,' said Michael Gordon, senior economist at Westpac in Auckland. Growth was stronger than the 0.4 per cent that both the RBNZ and the Treasury Department forecast. Treasury Chief Economist Dominick Stephens yesterday said that while recent data has been weak, he still expects growth to pick up in 2025. From a year earlier, GDP fell 0.7 per cent, which was less than economists' estimated 0.8 per cent decline. Still, the annual GDP contraction in the fourth quarter was revised to 1.3 per cent from 1.1 per cent. Key drivers of the first-quarter expansion were farming and manufacturing, today's report showed. Manufacturing grew 2.4 per cent and goods exports increased 3.6 per cent, led by primary products. Tourism fell. GDP per capita rose 0.5 per cent from the fourth quarter, its second straight gain after more than two years of decline. BLOOMBERG
NZ Herald
5 days ago
- Business
- NZ Herald
Median house price drops again to $763k, sales taking longer, Reinz Monthly Property Report shows
And while the number of properties sold jumped by 8.9% month-to-month and the number of listings rose by 2.9%, the median number of days to sell them has increased. The median national house price in May is $763,000. Photo / Michael Craig The median number of days it is taking to sell houses is 47, increasing by three days since last May. Focusing on Auckland only, houses were taking a median of 46 days to sell, unchanged since last year. And the median price in Auckland specifically dropped 3.5% over the year. That puts the median house price in Auckland at $975,000 in May. Were public holidays in May to blame? Economists react Westpac senior economist Michael Gordon said the report showed 'signs of improving momentum in the New Zealand housing market in April didn't carry through'. Gordon pointed to a lower HPI increase in May, at 0.1%, compared with April's 0.4%. 'It's possible that public holidays had a lingering impact on the May figures, given that fewer-than-usual properties were brought to market in April,' he said. 'We've seen in the past that when Easter Monday and Anzac Day fall in the same week, this tends to be treated as an extended holiday period. 'That aside, though, we continue to see a modest response to the ongoing fall in fixed-term mortgage rates. Buyer interest is clearly running high, with mortgage applications still far above last year's levels.' Westpac senior economist Michael Gordon says the report shows "signs of improving momentum in the New Zealand housing market in April didn't carry through". 'But with a sizeable stock of unsold homes on the market, there has been limited upward pressure on prices to date.' ANZ senior economist Matthew Galt said a lid was being kept on house price growth by new listings and high inventories. 'Plenty of willing sellers have come forward recently and new listings and inventories remain high, keeping a lid on house price growth,' Galt said in a statement. 'Our forecast is that house prices will accelerate over the second half of the year in response to lower interest rates, to a monthly pace closer to 0.5% m/m [month on month]. However, with high-frequency economic activity indicators soft of late, and housing market indicators still going sideways for the most part, the risks are tilted towards slower house price inflation than this.' Raphael Franks is an Auckland-based reporter who covers business, breaking news and local stories from Tāmaki Makaurau. He joined the Herald as a Te Rito cadet in 2022. Sign up to The Daily H, a free newsletter curated by our editors and delivered straight to your inbox every weekday.
Business Recorder
6 days ago
- Business
- Business Recorder
Australia, New Zealand dollars vulnerable as Israel-Iran conflict escalates
SYDNEY: The Australian and New Zealand dollars remained vulnerable to declines on Monday as the conflict between Israel and Iran showed no sign of cooling and oil prices climbed anew, although the sell-off in global stocks did steady a little. The Aussie dropped 0.3% to $0.6470, having fallen 0.7% on Friday to as low as $0.6457. It has support at the 200-day moving average of $0.6429, while resistance is stiff at $0.6550. The kiwi dollar was flat at $0.6008, after diving 0.9% on Friday to as low as $0.5996. Australia, New Zealand dollars tumble as Israel's strike on Iran hammers global risk It has support at 60 cents. On Monday, Wall Street futures climbed slightly while currency markets were mostly calm as investors assessed the latest developments in the Middle East. Iranian missiles struck Israel's Tel Aviv and the port city of Haifa on Monday, destroying homes and fuelling concerns that it could lead to a broader regional conflict. 'The main influence on AUD/USD (this week) is likely to be the conflict in the Middle East and the FOMC meeting,' said Joseph Capurso, head of international economics at the Commonwealth Bank of Australia, referring to the US Federal Open Market Committee meeting starting on Tuesday. 'AUD/USD could fall nearer support at 0.6307 if the conflict escalates significantly.' Strategists from Deutsche Bank noted that the performance of the Australian dollar has a negative correlation with oil prices, even though Australia has become an energy exporter over recent years. Australia will publish monthly jobs figures on Thursday where expectations are for a gain of 25,000 jobs in May and a steady jobless rate of 4.1%. The labour market has been surprisingly resilient and another strong print could challenge market pricing for a rate cut next month, which is now priced at 75%. New Zealand will release its first-quarter gross domestic product figures on Thursday where forecasts are for a solid quarterly growth rate of 0.7% as the economy emerged from a policy-induced downturn. 'Our 0.7% growth forecast is an upgrade from our previous estimate of 0.4%… The signs of strength in the sectoral data were something of a surprise for us,' said Michael Gordon, senior economist at Westpac. Swaps imply there might be just one rate cut left in the current easing cycle from the Reserve Bank of New Zealand, which is more than fully priced in by November.
New Straits Times
6 days ago
- Business
- New Straits Times
Australia, New Zealand dollars vulnerable as Israel-Iran conflict escalates
SYDNEY: The Australian and New Zealand dollars remained vulnerable to declines on Monday as the conflict between Israel and Iran showed no sign of cooling and oil prices climbed anew, although the sell-off in global stocks did steady slightly. The Aussie dropped 0.3 per cent to US$0.6470, having fallen 0.7 per cent on Friday to as low as US$0.6457. It has support at the 200-day moving average of US$0.6429, while resistance is stiff at US$0.6550. The New Zealand dollar was flat at US$0.6008, after diving 0.9 per cent on Friday to as low as US$0.5996. It has support at 60 US cents. On Monday, Wall Street futures climbed slightly while currency markets were mostly calm as investors assessed the latest developments in the Middle East. Iranian missiles struck Israel's Tel Aviv and the port city of Haifa on Monday, destroying homes and fuelling concerns that the situation could escalate into a broader regional conflict. "The main influence on AUD/USD this week is likely to be the conflict in the Middle East and the FOMC meeting," said Joseph Capurso, head of international economics at the Commonwealth Bank of Australia, referring to the US Federal Open Market Committee meeting starting on Tuesday. "AUD/USD could fall nearer support at 0.6307 if the conflict escalates significantly." Strategists from Deutsche Bank noted that the performance of the Australian dollar has a negative correlation with oil prices, even though Australia has become an energy exporter in recent years. Australia will publish monthly jobs figures on Thursday, where expectations are for a gain of 25,000 jobs in May and a steady jobless rate of 4.1 per cent. The labour market has been surprisingly resilient, and another strong print could challenge market pricing for a rate cut next month, which is now priced at 75 per cent. New Zealand will release its first-quarter gross domestic product figures on Thursday, where forecasts are for a solid quarterly growth rate of 0.7 per cent as the economy emerges from a policy-induced downturn. "Our 0.7 per cent growth forecast is an upgrade from our previous estimate of 0.4 per cent... The signs of strength in the sectoral data were something of a surprise for us," said Michael Gordon, senior economist at Westpac. Swaps imply there might be just one rate cut left in the current easing cycle from the Reserve Bank of New Zealand, which is more than fully priced in by November.
