A distinct lack of economic data on Monday has seen both the Pound and the New Zealand Dollar subject to movement from foreign currency changes. Trader profit locking has caused the Pound to soften and a combination of waning consumer confidence and commodity cuts has weakened the ‘Kiwi’ (NZD) Dollar.
The Pound Sterling to New Zealand Dollar exchange rate is currently trending in the region of 2.0156.
Those invested in the Pound may be feeling like they’ve disembarked from an intense rollercoaster after the extreme volatility caused by the Scottish bid for independence. In the build up to the referendum the Pound plunged across the board as traders priced in the detrimental effect of an independent Scotland on the Pound. Each successive opinion poll gave different margins with many showing the lead to have changed several times. The much closer-than-anticipated polls saw trader anxieties crescendo as the days progressed towards the referendum conclusion.
Friday morning saw victory for those in favour of a united Britain. The immediate effect was to see the Pound shoot up across the board. The dramatic increase in demand opened up many selling opportunities and so Sterling wasn’t able to hold on to its gains as traders locked in their profits.
The ‘Kiwi’ Dollar performed a little better on Friday than that of the past few weeks due to a positive set of economic data publications. September’s ANZ Consumer Confidence Index rose from 125.5 to 127.7. Augusts’ Credit Card Spending data also showed an impressive uptick from -0.9% to 0.7%.
The Pound Sterling to New Zealand Dollar exchange rate has hit a low today of 2.0017.
On Monday the Pound has experienced relatively little movement in comparison to previous weeks. This is because of a particularly sparse economic calendar with a complete absence of any UK data. A slight Sterling softening can be attributed to new anxieties over Scottish devolution. The fear of losing Scotland caused Prime Minister David Cameron to panic and offer Scotland much greater power over their domestic affairs if they opted to maintain the union. With little known about the effect Scottish devolution will have on the British currency many traders have chosen to pull away in order to avoid potential risk.
Sunday’s Westpac Consumer Confidence was less-than-ideal for ‘Kiwi’ having fallen from 121.2 to 116.7. The New Zealand Dollar downfall, however, is most likely to be attributed to the rapid decline in commodity prices of late. Crude oil and raw materials have lowered in value considerably after Chinese and American data showed that supply far outweighs demand. Recent data also shows that corn and soybeans have dropped to the lowest level since 2010 amid speculation of a bumper harvest from the US.
The ‘Kiwi’ downtrend may also be as a result of the bullish US Dollar. Since the Federal Reserve’s outlook on monetary policy gained a slightly hawkish tone; demand for the ‘Buck’ (USD) has increased exponentially. The prospect of an early 2015 benchmark rate increase has caused many traders to make long-term investments in the US Dollar. Emerging market and commodity-sensitive currencies have fallen under the weight of the surging ‘Buck’ thanks to weakened risk sentiment.
The Pound Sterling to New Zealand Dollar exchange rate has reached a high today of 2.0172.
UPDATE
The Pound Sterling to New Zealand Dollar exchange rate is currently trending in the region of 2.0098.
Having steadily gained strength on record-low commodity prices the Pound to New Zealand Dollar has experienced a reversal after Chinese factory output aids a commodities rebound.
The HSBC Chinese Manufacturing PMI printed much better than the market consensus of a drop to 50.0 which is the level that separates growth from contraction. The actual data was a rise from the previous figure of 50.2 to 50.5. In the immediate aftermath of this positive data commodity prices have rebounded, especially raw materials and crude oil.
