Volatile Kiwi Dollar Consolidates In Tight Range

After a volatile week of trading, price action in New Zealand?s currency market was hinged on expectations of the strength of the US economy as indicated by data on non-farm payrolls.

Headlines
Booming Earnings Prospects For Dairy, Beef and Crop Farmers
Economists at the Ministry of Agriculture and Forestry forecasted that growth in global commodity prices over the next four years is likely to boost future earnings for New Zealand?s dairy, beef and crop farmers.


Source: The New Zealand Herald

RBNZ Recommends Floating GST Rate to Control Inflation
In a submission to Parliament?s monetary policy inquiry, the Reserve Bank of New Zealand suggested the imposition of a floating goods and services tax (GST) rate to curtail inflation whenever acceleration in consumer spending poses an inflationary threat. Although the proposition is likely to invite criticism, the floating GST rate may have the double advantage of smoothing out fluctuations in both the currency exchange rate and interest rate.
http://www.stuff.co.nz/4152146a13.html
Source: Stuff.co.nz

Telecom Reports Disappointing Annual Earnings
New Zealand?s largest listed company, Telecom, reported an overall dismal corporate profitability outlook, even though net earnings, adjusted for one-off costs, rose 16.5 percent higher over the year to NZ $995 million. The company?s management commented that there were ‘reasonable prospects? of a decline in overall financial performance and predicted a slide of up to 8 percent in EBITDA for the year.
http://www.nzherald.co.nz/section/3/story.cfm?c_id=3&objectid=10455757
Source: The New Zealand Herald
Market Activity
Currency Market - NZD:
After a volatile week of trading, price action in New Zealand?s currency market hinged on expectations of the strength of the US economy as indicated by the non-farm payrolls data. The below-expectation NFP metric in July clouded the fundamental outlook for the US, but did little to help the Kiwi recover from its downtrend. During the Wellington session, the Kiwi dollar traded in a relatively narrow range of 40 points and found support above the 0.7623 USD level reached Thursday.
At the close of the Wellington session, the trade weighted index increased to 73.60 from 73.17 on Thursday.
NZDUSD (Daily Chart)


Prepared by DailyFX Research Team
Source: Bloomberg

Equity Market - NZSX-50 Index:
The benchmark NZSX-50 index dropped 15.79 points, or 0.4 percent, to a four-month low of 4122.41 on turnover of NZ$171 million. New Zealand?s stock exchange recorded losses for the sixth consecutive trading session on Friday, and the bourse declined by more than 100 points over the week. The beginning of the corporate earnings season did not prove auspicious for Telecom, and the stock slid to a 10-month low of NZ$432. Share price declined by 3.4 percent, or 15 cents, after the announcement of an 8 percent decline in annual earnings before interest, tax, depreciation and amortization.
[I]NZSX-50 Index (Daily Chart)


Prepared by DailyFX Research Team
Source: Bloomberg[/I]
Fixed-Income - 10-year Government Bond Yields:
Demand for government debt remains high at a time of lingering concern over investment in riskier asset classes. Yield on New Zealand?s benchmark 10-year bond dropped 4 basis points to 6.392 percent as risk-aversion stoked the price for the 10-year note to 97.054.
[I]10-year Government Bond Yields (Daily Chart)


Prepared by DailyFX Research Team
Source: Bloomberg[/I]