While the ‘Kiwi’ came under pressure overnight due to disappointing Chinese manufacturing figures, the GBP to NZD exchange rate ended the local session at similar levels to those recorded at the beginning of trading.
The news that China’s manufacturing sector contracted for a fifth month weighed on New Zealand’s export prospects and slightly lessened the appeal of the domestic currency.
The New Zealand Dollar, like its Australian counterpart, briefly softened against the majority of its most traded currency rivals as the gauge of Chinese manufacturing came in at 48.1 in March, lower than February’s reading of 48.5 and below the 50 mark separating growth from contraction.
As pointed out by senior FX manager Sam Tuck; ‘There are continued concerns over our major export market. If they slow down, obviously it is very bad for the New Zealand economy. [The China data] is the reason why the Kiwi is on the defensive at the moment.’
However, the Pound was also feeling the pressure as the European session kicked off and the GBP/NZD pairing was trading in a fairly narrow range.
In a quiet UK news day Sterling softened against the US Dollar, Euro, Australian Dollar and ‘Kiwi’.
While UK inflation figures (due out tomorrow) will be of considerable interest, in the opinion of industry expert Lee McDarby; ‘If Sterling is to surge, real news on interest-rate hikes is required. The Bank of England minutes seem to have reinforced the notion that rates will remain at record lows into next year.’
The New Zealand Dollar, on the other hand, continues to derive underlying support from the Reserve Bank of New Zealand’s decision to raise interest rates and the expectation that borrowing costs will be increased further in the months ahead.
Economic data for New Zealand to be aware of this week includes the nation’s trade balance figures.
China’s leading index will also be of interest.
Further GBP/NZD movement could be triggered by UK retail sales and growth reports.
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,0.8535,
New Zealand Dollar,,Euro,0.6170,
New Zealand Dollar,,Australian Dollar,0.9369,
New Zealand Dollar,,Pound Sterling,0.5173,
US Dollar,,New Zealand Dollar,1.1737 ,
Euro,,New Zealand Dollar,1.6196 ,
Australian Dollar,,New Zealand Dollar,1.0676 ,
Pound Sterling,,New Zealand Dollar, 1.9339,
[/table]
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