As the week continued the Pound to New Zealand Dollar (GBP/NZD) exchange rate softened in response to further encouraging news from New Zealand.
Over the last few days the ‘Kiwi’ has been buoyant as a result of New Zealand’s credit outlook being revised from Stable to Positive by Fitch.
The commodity-driven asset was given a further boost during Australasian trading as New Zealand’s Performance of Manufacturing Index showed continued growth.
The measure of New Zealand’s manufacturing sector stayed in expansion territory for a 21st month, with the index advancing from 52.6 in May to 53.3 in June.
Although the report showed that the pace of new orders is declining, and that confidence among manufacturers is slipping slightly, Business New Zealand (responsible for compiling the report) asserted; ‘even if New Zealand’s manufacturing sector is definitely losing a bit of momentum at present it does not look to be the case in the services, merchant and building sectors, according to the QSBO. So we’re left with the impression of a strongly expanding economy, overall.’
The USD to NZD pairing hit a low of 1.1319 after the minutes from June’s Federal Open Market Committee gathering were decidedly dovish in tone.
As well as trending in a stronger position like peers like the Pound, the New Zealand Dollar exchange rate was able to brush a three-year high against the ‘Greenback’.
According to market strategist Imre Speizer; ‘The minutes themselves were not insightful, there was nothing significantly new in them but the market immediately responded, pushing down interest rates in the US, pushing down the US Dollar and therefore pushing up most currencies against the US. It suggests the market might have positioned itself for a hawkish report, didn’t get a hawkish report and then quickly had to take back their speculative positions.’
Meanwhile, the Pound to New Zealand Dollar exchange rate was feeling the pressure as the UK’s Trade Balance figures revealed that the UK’s shortfall widened unexpectedly in May.
After hitting a low of 1.9407 the GBP to NZD exchange rate stabilised in the region of 1.9438.
‘Kiwi’ gains were a little limited by China’s lower-than-forecast import and export figures.
In the hours ahead some modest Pound to New Zealand exchange rate movement could occur in response to the Bank of England’s interest rate announcement.
Investors will also be focusing on tomorrow’s UK Construction Output data and, to a lesser extent, New Zealand’s Food Price report.
UPDATED: 09:20 GMT 11 July, 2014
Could the Pound Recover Losses?
Yesterday the USD to NZD exchange rate was trading in the region of a three-year low as the New Zealand Dollar’s resilient attitude continued.
The ‘Kiwi’ also strengthened to a 13-month high against the Euro as developments in Portugal triggered widespread declines in the Common Currency.
On Friday the Pound to New Zealand Dollar remained in a slightly weakened position as New Zealand’s Food Price data showed a month-on-month increase of 1.4%.
If today’s UK Construction Output data disappoints, the Pound to New Zealand Dollar (GBP/NZD) exchange rate could extend declines before the weekend.
It is expected that UK Construction Output increased by 0.9% in May, month-on-month.
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,0.8798,
New Zealand Dollar,,Euro,0.6460,
New Zealand Dollar,,Australian Dollar,0.9403,
New Zealand Dollar,,Pound Sterling,0.5145,
US Dollar,,New Zealand Dollar,1.1366,
Euro,,New Zealand Dollar,1.5485,
Australian Dollar,,New Zealand Dollar,1.0638,
Pound Sterling,,New Zealand Dollar, 1.9417,
[/table]
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