FUTURES Watch the 53c mark

Press, 3 August 1985, Page 24

FUTURES Watch the 53c mark

Until the Australian dollar firms up again or the United States dollar weakens, the New Zealand dollar will find it difficult to break 53 U.S. cents, according to Dr Brent Layton, of Marshall Futures. The New Zealand dollar showed remarkable strength yesterday. It had a short-lived tumble early in the morning but it traded most of the day around 52.5 U.S. cents, in spite of a much weaker Australian dollar and a stronger U.S. dollar against major currencies.

“We favour closing shorts and tentatively opening longs, aborting if the kiwi breaks 53 U.S. cents or the Aussie breaks 72c, and the U.S. dollar goes below 2.78 Deutschmarks.”

Mr Geoff McDonnell, of Mair Futures, said the down trend in the U.S. dollar had been established, but lately any bullish news from America had caused the currency to strengthen “The big question now is what other currencies will fall in sympathy with the U.S. dollar. The Italian lira has devalued because of economic events, and the South African rand has devalued because of political events. "Other countries may adjust their currencies so that their own established international trading patterns remain harmonious,’’ Mr McDonnell said. “The currencies of Japan, West Germany and Britain along with that of New Zealand, have appreciated against the U.S. dollar. Japan, West Germany, and Britain all have proven profitable industrial economies, while New Zealand is still an unknown quantity. “If New Zealand exporters lose ground, circumstances may appear that cause the kiwi to weaken. “I feel that next month’s Budget will include mechanisms to ensure New Zealand exporters regain any ground lost, and this sentiment combined with what is now a nervous foreign exchange market may encourage the opening of long positions on the U.S. dollar futures market.” Wool

Prices of the wool contract tumbled on Tuesday afternoon in response to the renewed firming of the New Zealand dollar after the shake out late last week, Dr Layton, of Marshall Futures, said. “The first sale of the new season is on Thursday, August 8. This will provide traders with some guide to wool prices

next season. We think that the Wool Board will intervene around 500 c a kg, and this will provide a short-term floor to the market.” Mr McDonnell, of Mair’s, said wool-contract prices still moved in sympathy with currency prices. “The major event of the week has been the increase in tenderable stock from 801 bales to 1307 bales, which may show that there is more wool around than thought, and this could cause the near months to fall in price thus favouring the shorts. “However, an interesting week may evolve, as this year futures prices have dropped prior to the first auctions. Preseason optimism has not pushed futures up as usual. The big catalyst now becomes the opening 35F2D quotes at the first round of auctions.” Interest rates Prices of more commercial bill contracts tumbled during the week as interest rates firmed in the money market, said Dr Layton, of Marshall Futures. Trading was moderately active. “The bear trend is still intact, but the support at 7500 in September will take some breaking through.” Mr McDonnell, of Mair Futures, said it had been a week of fluctuations in the PCP contracts, with a fall in the index yesterday morning as call rates increased 1 per cent on Thursday.

“It still appears that rates will remain firm in New Zealand in the short term, but we would be looking to taking profits on short position around the 7500 level in September, 1985.”

WOOL FUTURES MARKET WEEK ENDED August 2

?US CONTRACTS Mth Open H/L Last Vol Aug 1.9450 450/300 330 64 Sep 1.9750 750/600 600 8 Contracts traded: 72 COMMERCIAL BILLS Mth Open H/L Last Vol Aug 7535 550/490 490 36 Sep 7550 550/534 540 32 Oct 7620 645/620 626 13 Dec 7830 830/830 830 9 Contracts traded: 90 WOOL FUTURES Mth Open H/L Last Vol Aug 514 514/511 512 13 Oct 515 515/512 512 11 Dec 516 516/516 516 4 Jan 516 517/516 517 3 Mar 525 527/525 527 7 May 532 534/532 534 3 Aug 546 546/546 546 1 Contracts traded: 42

Trading Traded prices Total Upen months This week To date this cont’s Wool High Low Last 9 High Low week August Aug ’85 521 511 512 544 445 67 157 Oct ’85 522 512 512 556 472 41 305 Dec ’85 520 513 516 560 473 21 244 Jan ’85 520 513 517 560 474 33 311 Mar ’86 529 521 527 560 492 37 182 May ’36 535 530 534 565 522 28 242 Aug ’86 548 542 546 571 540 17 134 Oct ’86 546 544 546 574 544 5 25 Dec ’86 546 539 546 571 539 6 33 Jan ’87 550 545 547 568 544 12 23 Totals 267 1656 Tenderable stock: 1307 bales. 35F2D quotes — 531 as at July 27