Although New Zealand’s trade data was largely positive, the Pound to New Zealand Dollar (GBP/NZD) exchange rate advanced by 0.20% on Friday.
Overnight the ‘Kiwi’ was supported against several of its most-traded currency counterparts by a report detailing a seventh consecutive monthly trade surplus for New Zealand.
The commodity-driven nation recorded a surplus of 285 million Dollars in May, down from a surplus of 498 million Dollars the previous month. While this result was below the expected surplus of 300 million Dollars, the annual trade balance turned from a deficit of 901 million Dollars to a surplus of 1.37 billion Dollars.
The comparatively positive trade figures were largely the result of Chinese demand, and China remains New Zealand’s largest trading partner.
New Zealand’s exports were up 13% in May from the same period of the previous year, with exports to Japan, Korea and the US all increasing. Exports to Australia declined.
It is expected that the recently recorded drop in the price of dairy (New Zealand’s main commodity) may soon have an impact on trade figures. As one Westpac economist observed; ‘Lower dairy prices are now starting to come through in the trade data. We expect further price falls to come through in the June figures.’ Imports were up 7% on the year.
While the New Zealand Dollar (NZD) exchange rate initially climbed in response to the data, the currency later moderated its performance and eased lower against the Pound (GBP).
Sterling continues to derive support from speculation surrounding UK interest rate hikes. The hotly debated topic was reignited yesterday after the Bank of England’s Financial Stability report outlined plans for dealing with the UK’s overheating housing market.
The GBP to NZD exchange rate was trading in the region of 1.9445 having achieved a high of 1.9453.
Pound gains were a little limited as a report showed that a measure of UK consumer confidence failed to increase by as much as expected. Separate UK figures confirmed that UK house price growth eased to its slowest pace for five months.
Later today the UK’s final first quarter growth data will be released. If the report shows that the UK economy expanded by any more than the 0.8% initially estimated in the first three months of the year, the Pound to New Zealand Dollar exchange rate could advance further before the weekend.
UPDATED 06:50 GMT 30 June, 2014
Overnight the Pound to New Zealand Dollar exchange rate recovered recent losses and pushed above 1.94 as a run of economic reports for New Zealand fell short of estimated levels.
Firstly, New Zealand’s Building permits figure for May came in at -4.6% month-on-month rather than the -2.5% reading expected. This followed a revised 1.9% reading the previous month.
This was followed by a less-than-impressive domestic business confidence index for New Zealand. The measure plummeted from 53.5 to 42.8 in June.
Similarly, the nation’s Activity Outlook dropped from 51 to 45.8.
The GBP/NZD exchange rate was trading in the region of 1.9430 as the European session opened.
UK mortgage approvals figures could be responsible for further movement in the Pound to New Zealand Dollar exchange rate as the day continues.
New Zealand Dollar (NZD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
New Zealand Dollar,
,US Dollar,0.8756,
New Zealand Dollar,,Euro,0.6431,
New Zealand Dollar,,Australian Dollar,0.9301,
New Zealand Dollar,,Pound Sterling,0.5145,
US Dollar,,New Zealand Dollar,1.1421,
Euro,,New Zealand Dollar,1.5529,
Australian Dollar,,New Zealand Dollar,1.0753,
Pound Sterling,,New Zealand Dollar, 1.9439,
[/table]
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