iPredict Update: Kiwi Dollar To Reach Parity With Aussie Dollar In 2015

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MIL OSI

IPREDICT LTD

NEW ZEALAND WEEKLY ECONOMIC & POLITICAL UPDATE

Thursday 26 February 2015

www.ipredict.co.nz

 

KIWI DOLLAR TO REACH PARITY WITH AUSSIE DOLLAR IN 2015 

The New Zealand dollar will reach parity with the Australian dollar in 2015 and there is just over a 50% probability it will do so by the end of June, according to the combined wisdom of the 8000+ registered traders on New Zealand’s predictions market, iPredict.  It is again more likely than not there will be a cut in the New Zealand Official Cash Rate in 2015.  Greece is now more strongly expected to stay in the Euro through 2015.  The next Australian Federal Election is 50:50, but is expected to be between Labor’s Bill Shorten and the Liberals’ Malcolm Turnbull.  Winston Peters is not expected to stand in the Northland by-election, which is strongly expected to be won by National.  Kevin Hague is overwhelmingly picked to be the next male co-leader of the New Zealand Greens.

Northland By-election:

·       Winston Peters is not expected to be the NZ First candidate for the Northland by-election (only a 40% probability he will be, up from 33% last week)

·       Labour candidate expected to win more than 25.89% of the vote in the Northland by-election (60% probability Labour will beat this score, down from 87% last week)

·       Coin toss over whether National candidate will win more than 50% of the vote in the Northland by-election (50% probability National candidate will beat this score, down from 70% last week)

·       Only 5% probability a candidate from other National or Labour will win Northland by-election (down from 5% last week) 

New Zealand Politics:

·       Kevin Hague overwhelmingly favoured to be next Green Party co-leader (95% probability)

·       John Key is expected to remain National leader until at least the end of 2016 (80% probability, up from 79% last week) and has a 49% probability of remaining National leader until at least the end of 2017 (steady compared with last week)

·       Steven Joyce remains favourite to become National Party leader if a vacancy arises (29%, up from 27% last week), followed by Paula Bennett (26%, up from 24%) and Amy Adams (12%, up from 11%)

·       Stocks on Andrew Little’s longevity as leader of the Labour Party will be launched in the near future

·       Judith Collins expected to be appointed to Cabinet before next election (60% probability, down from 62% last week)

·       Next election expected in 2017 (92% probability, steady compared with last week)

·       Forecast party vote shares at next election:

o   National                              45.2% (steady compared with last week)

o   Labour                                32.1% (up from 32.0%)

o   Greens                               11.1% (steady)

o   NZ First                                6.9% (steady)

o   Others                                  4.7% (down from 4.8%)

·       National expected to win 2017 General Election (55% probability, down from 57% last week)

·       Wellington councils not expected to be amalgamated by end of 2015 (only 43% probability they will be) 

New Zealand Economics:

·       New Zealand dollar expected to reach parity with Australian dollar by the end of 2015 (75% probability) and may reach parity by end of June 2015 (53% probability)

·       Quarterly GDP growth expected to be:

o   0.7% in the March quarter (steady compared with last week)

o   1.1% in the June quarter (steady)

o   1.1% in the September quarter (steady)

o   1.1% in the December quarter (steady)

·       Annual growth expected to be 4.0% in the 2015 calendar year (steady compared with last week)

·       Unemployment expected to be:

o   5.4% in the March quarter (steady compared with last week)

o   5.3% in the June quarter (steady)

o   5.2% in the September quarter (steady)

o   5.3% in the December quarter (steady)

·       Current account deficit expected to be 3.5% of GDP in the December quarter (steady compared with last week) and 3.4% in the March quarter (steady)

·       Annual inflation expected to be:

o   0.3% to end of March 2015 quarter (steady compared with last week)

o   0.6% to end of June 2015 quarter (steady)

o   0.8% to end of September 2015 quarter (steady)

o   1.0% to end of December 2015 quarter (steady)

·       Official Cash Rate priced to be:

o   3.495% on 12 March (up from 3.491%)

o   3.488% on 30 April (up from 3.486%)

o   3.450% on 11 June (down from 3.451%)

o   3.424% on 23 July (up from 3.421%)

o   3.386% on 10 September (down from 3.395%)

o   3.367% on 29 October (down from 3.376%)

o   3.372% on 10 December 2015 (down from 3.380%)

o   This implies the OCR is more likely than not to be cut on 29 October (compared with it being more likely than not to remain at 3.50% throughout the calendar year last week)

o   OCR stocks out to June 2016 will be launched in the near future

·       Only 17% probability of a fiscal surplus in 2014/15 (down from 18% last week)

·       Fiscal balance expected to be:

o   -0.17% of GDP in 2014/15 (steady compared with last week)

o   0.85% of GDP in 2015/16 (up from 0.75%)

o   1.98% of GDP in 2016/17 (steady)

o   2.38% of GDP in 2017/18 (steady)

·       There is only a 55% probability Fonterra’s payout in 2015/16 will be above $6.00 (before retentions)

Foreign Affairs/Constitution:

·       Next UK Parliament expected to consist of:

o   Conservatives                               37.9% of seats in the House of Commons (steady compared with last week)

o   Labour                                          37.1% of seats (steady)

o   Nationalist parties                            6.6% of seats (steady)

o   UKIP and similar                              5.7% of seats (steady)

o   Liberal Democrats                            4.9% of seats (steady)

o   Unionist parties                                2.1% of seats (steady

o   Green and similar                             1.9% of seats (steady)

o   Independents and Speaker      1.9% of seats (steady)

o   All others                                         2.0% of seats (steady)

·       David Cameron expected to be prime minister after next UK election (57% probability, up from 55% last week)

·       Boris Johnson expected to be elected to UK House of Commons this year (92% probability, down from 95% last week)

·       Socialist Workers’ Party expected to defeat People’s Party in next Spanish election (60% probability, steady compared with last week)

·       All Eurozone countries, including Greece, expected to remain in Euro in 2015 (only 13% probability of an announcement of a departure this year, down from 29% last week)

·       Tony Abbott is expected to remain leader of the Australian Liberal Party until 1 July 2015 (only 23% probability of departing before then, up from 20% last week) but be replaced by Malcolm Turnbull as leader of the Australian Liberal Party by nomination day (69% probability Turnbull will be leader on that day, up from 60% last week)

·       Bill Shorten expected to be Labor leader at next Australian federal election (90% probability)

·       Coin toss between Liberals and Labor for next Australian Federal election in 2016 (both on 50%, steady compared with last week)

·       Hillary Clinton is favoured to be the Democratic Party’s nominee for US president in 2016 and to be elected to that office (48% probability, up form 46% last week).  Jeb Bush has a 39% probability of being the Republican nominee (steady compared with last week) followed by Scott Walker (20% probability, down from 25% last week)

·       There is only a 31% probability New Zealand will sign the Trans-Pacific Partnership this year (up from 25% last week), and the Trans-Pacific Partnership is not expected to be ratified by the US Congress before 1 July 2017 (only 31% probability it will be, steady compared with last week)

·       Helen Clark’s prospects of being the next UN Secretary General are 25% (down from 27% last week)

·       There is a 13% probability New Zealand will become a republic by 2020 (down from 15% last week) 

Notes:

·       iPredict Ltd is owned by Victoria University of Wellington.  Details on the company and its stocks can be found at www.ipredict.co.nz.

·       The weekly economic and political update is prepared by Exceltium Ltd on a pro bono basis and is based on a snapshot taken at a random time each week.  This week’s was taken at 10.46 am today. 

pdf icon 150226-1046-Economic-and-Political-Update-FINAL.pdf


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Selwyn Manning, BCS (Hons.) MCS (Hons.) is an investigative political journalist with 23 years media experience. He specializes in reportage and analysis of socioeconomics, politics, foreign affairs, and security/intelligence issues. Selwyn has extensive experience as a commentator and has provided live political analysis to a wide range of television and radio organizations broadcasting in New Zealand, Australia and globally including the BBC (Five Live, London) and BBC (World Service). He is currently a correspondent to Australia's FiveAA radio, and is a regular live-on-air panelist on Radio New Zealand's The Panel with broadcaster Jim Mora.

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