WELLINGTON: The collapse in the oil price has led to investors eschewing assets with links to commodities, and created a divergence between hard commodities, such as oil and minerals, and soft commodities, such as food.
The New Zealand dollar may continue to push near decade-highs against its transtasman counterpart as weak commodity prices sap investors’ appetite for Australia’s economic exposure to iron ore and minerals.
The kiwi traded at A95.10c on Christmas Eve from 95.23c on Tuesday, having broken above 95c for the first time in 11 months in December. It traded at US77.21c from 77.02c at 8am on Wednesday and 77.37c on Tuesday.
That’s led to increased speculation the Reserve Bank of Australia may have to cut interest rates again, which would increase the yield advantage New Zealand has over its neighbouring economy.
“We’ve seen hard commodities attempt to bounce in the last week, but it hasn’t come off,” said Kevin Morgan, senior dealer foreign exchange and derivatives at OMF in Auckland.
“The kiwi/aussie continues to press upwards and there’s potential for us to go one-for-one in the first quarter of 2015.”
