NZ dollar to drop by 1.5% this week

by NZ Adviser09 Oct 2017
The New Zealand dollar is expected to drop by 1.5% this week in the wake of the final vote count on Saturday and as hopes for US tax reform increase, and rate hikes push up the US dollar.

Reuters said the US dollar got a lift on Friday after the Republication-controlled House of Representatives narrowly approved a fiscal 2018 spending blueprint, which contains a legislative tool that will enable a tax bill to pass by simple majority vote in the Senate (where the Republications hold 52 of 100 seats).

This vote is being viewed as one step closer to the tax reform. 

CMC Markets Trader Sheldon Slabbert said recent data out of the US, and comments from the Federal Reserve, have increased expectations of a US rate hike in December. Against a backdrop where the rate differential narrows between the US and New Zealand, “the kiwi will get squeezed”, Slabbert said.

All eyes were on the final vote count for the general election on Saturday, meaning political parties would now be able to kick off formal negotiations to form a government.

Slabbert said if National governs again it will be “positive” for the New Zealand dollar, whereas a Labour-Green collation could cause the dollar to “lose some ground”.


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