While the ‘Kiwi’ was trading in the region of a multi-week low against a bullish Australian Dollar, the currency still closed local trading higher against the Pound and preparing to post a 5-day gain against the ‘Greenback’.
Although the Pound was boosted against its rivals yesterday by stronger-than-forecast UK retail sales data, Sterling failed to gain the upper hand against the New Zealand Dollar.
Yesterday an encouraging trade balance report for New Zealand, showing a record trade surplus for February, triggered widespread gains in the domestic currency.
While New Zealand’s Finance Minister Bill English recently asserted that the ‘Kiwi’ is ‘a bit too high’, the Deputy Governor of the Reserve Bank of New Zealand intimated that exporters have adjusted to the stronger exchange rate – indicating that a bullish New Zealand Dollar no longer poses the economic risks it once did.
Overnight commodity-driven currencies like the ‘Kiwi’ received additional support as Li Keqiang (China’s Premier) stated that he expects national growth to be ‘reasonable’. The Premier also acknowledged that China is facing economic difficulties which can’t be ignored.
Hopes that the government of the world’s second largest economy will be pushed into introducing stimulus bolstered the outlooks of nations that depend on China for trade, like New Zealand.
According to one Auckland-based industry expert; ‘Aussie and Kiwi can continue the trend of gains [Li] encouraged people to think that China is going to provide some more stimulus or is prepared to act against weakness, which gave people confidence that China is not going to slow down in the short term’.
However, while the ‘Kiwi’ is performing strongly, the GBP/NZD edged away from recent lows as a measure of UK consumer sentiment advanced to its strongest level since 2007.
The GfK confidence measure advanced to -5 from -7, beating estimates for a reading of -6.
As the European session progresses the GBP to NZD exchange rate may experience some movement in response to final UK growth data for the fourth quarter of last year.
This morning’s GDP report confirmed that the UK economy expanded by 0.7 per cent in the final three months of last year, quarter-on-quarter, and 2.7 per cent year-on-year.
Total business investment increased by 8.7 per cent in the quarter YoY rather than the 8.5 per cent projected. The UK index of services also advanced by more than expected, climbing 0.4 per cent in January month-on-month versus the predicted 0.3 per cent increase.
However, the UK also posted a larger-than-forecast current account deficit in the fourth quarter.
Next week New Zealand data is limited but fluctuations in the Pound to New Zealand Dollar pairing may occur following the release of UK mortgage approvals figures, China’s manufacturing/services PMI and UK manufacturing/services PMI.
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,0.8693,
New Zealand Dollar,,Euro,0.6309,
New Zealand Dollar,,Australian Dollar,0.9365,
New Zealand Dollar,,Pound Sterling,0.5226,
US Dollar,,New Zealand Dollar,1.1513 ,
Euro,,New Zealand Dollar,1.5777 ,
Australian Dollar,,New Zealand Dollar,1.0657 ,
Pound Sterling,,New Zealand Dollar, 1.9130,
[/table]
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