RESEND: NZ Dollar Outlook: Kiwi may continue decline after drop to 4-year low

The New Zealand dollar, which fell to a four-year low after the Reserve Bank last week dropped its tightening bias and opened the door to possible rate cuts, may continue its decline this week.

The kiwi may trade between 70 US cents and 74.90 cents, according to a BusinessDesk survey of 12 currency traders and strategists. Seven expect the currency to fall, while two say it may rise and three bet it will remain broadly unchanged. It was recently trading at 72.64 US cents.

The New Zealand dollar fell sharply last week after Reserve Bank governor Graeme Wheeler said future interest rate moves could be up or down, removing his previous bias for higher rates. Some traders are now betting that the next move will be a cut and this sentiment could be strengthened should the Reserve Bank of Australia lower interest rates at its meeting tomorrow. Traders are currently pricing in a 69 percent chance of an Australian cut tomorrow, according to the Overnight Swap Curve.

"Heading into the early part of the week, it looks to me as though we may just see some ongoing momentum from the big declines we saw last week and that may be added to if we see the Reserve Bank of Australia cut interest rates tomorrow," said Ric Spooner, chief market analyst at CMC Markets in Sydney. "There may be some spillover effect into the kiwi. We might just see people beginning to wonder if the RBNZ might ultimately move to an easing bias as well if global pressures continue."

Still, CMC's Spooner said the kiwi is unlikely to decline at the same pace as last week as traders are wary of pushing the US dollar too high given the impact a strengthening greenback has on US exports.

Those traders expecting the kiwi to rise or remain neutral this week pointed to a Relative Strength Index reading of 23. An RSI reading approaching 30 signals an asset may be oversold, according to the technical momentum indicator.

This week, traders will be eyeing governor Wheeler's speech to the Canterbury Employers Chamber of Commerce In Christchurch on Wednesday for further clues on the outlook for monetary policy. Some economists are expecting Wheeler to announce further rules to dampen a bubbling housing market amid concerns it could be flamed by lower interest rates.

Two indicators of the housing market are due this week, including Quotable Value's latest report on nationwide values on Tuesday and realtor Barfoot - Thompson's update on the Auckland market on Wednesday.

Grant Spencer, the central bank's deputy governor and its head of financial stability, is scheduled to talk to a Hawke's Bay Chamber of Commerce breakfast tomorrow, although his talk isn't scheduled for public release.

Meanwhile, the latest GlobalDairyTrade auction, due Wednesday, may show that even though prices are recovering, they are not high enough to support Fonterra Cooperative Group's forecast payout to dairy farmers for this season.

ANZ Bank New Zealand publishes its commodity price index for January tomorrow.

New Zealand labour market data for the December quarter, due out on Wednesday, is expected to signal a robust economy.

Local markets will be closed on Friday for the Waitangi public holiday.

Globally, key events this week include the US non-farm payrolls report on Friday and the Bank of England policy announcement on Thursday, where no change to interest rates is expected.

Australia will this week release data on trade, building approvals, consumer and business confidence, new home sales and retail sales.