The New Zealand Dollar (NZD) is forecast to give up its earlier gains against the Pound (GBP) on Wednesday as investors expect month on month UK industrial production to rebound.
Earlier in the session the ‘Kiwi’ edged higher against Sterling after a report released by the British Retail Consortium showed that store prices declined by 1.9% in July, the largest decline recorded since the series began in 2006.
The report also showed that food-price inflation eased to record low level of 0.3% from the previous number of 0.6%. Because of the data, the Pound made its first decline against the US Dollar (USD) in three days.
Further gains for the New Zealand Dollar were held in check after official data showed that the number of people in work in the South Pacific nation increased less than hoped by 0.4% in the second quarter of the year.
The figure disappointed economists who had been expecting a rise to 0.7%.
The report also showed that New Zealand’s unemployment rate ticked down to 5.6% in the last quarter, from 6.0% in the first quarter, compared to expectations for a decline to 5.8%.
The currency came under further pressure and dropped to a fresh two-month low against the US Dollar after a report showed that dairy prices fell again.
Dairy is New Zealand’s biggest export and declining prices are negatively influencing the economy; they are also one of the major reasons why the New Zealand Central Bank stepped up its attempts to weaken the ‘Kiwi’.
“The Reserve Bank was absolutely correct in saying the New Zealand dollar was not reflecting commodity prices, and it’s probably still not,” said Tim Kelleher, head of institutional FX sales at ASB Bank. “Dairy, risk off, and negative equities all combined, but dairy was the major one for us. The employment data was better, but the participation rate was down and people ignored the headline and looked at the details.”
If the day’s UK data does come in positively we can expect Sterling to regain lost ground and perhaps push higher. Softer-than-expected reports however are likely to leave the Pound lower and could see it make declines against other major peers.
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,0.8447 ,
New Zealand Dollar,, Pound Sterling,0.5008 ,
New Zealand Dollar,,Euro,0.6317 ,
New Zealand Dollar,,Australian Dollar,0.9062 ,
Euro,, New Zealand Dollar ,1.5827 ,
US Dollar,, New Zealand Dollar ,1.1839 ,
Australian Dollar,, New Zealand Dollar ,1.1022 ,
Pound Sterling,, New Zealand Dollar ,1.9950 ,
[/table]
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