Just prior to the publication of the Bank of England’s Financial Stability Report, the Pound to New Zealand Dollar (GBP/NZD) exchange rate was 0.15% softer.
Movement in the ‘Kiwi’ was fairly limited during the Australasian session due to an absence of pertinent economic data for New Zealand.
While the geopolitical situation did inspire some risk aversion, the commodity driven New Zealand Dollar remained in a stronger position against the Pound.
On Wednesday the New Zealand Dollar to US Dollar (NZD/USD) posted impressive gains in response to a very mixed bag of reports for the US. The services sector of the world’s largest economy may have expanded by considerably more than anticipated in June, but the nation’s first quarter growth figures were negatively revised to contraction of 2.9%.
Initially it had been forecast that the US economy contracted by just 1.0% due to the inclement winter weather, but it was estimated that the figure would be revised to -1.8%. The much steeper revision took markets by surprise and pushed the US Dollar lower.
A less-than-impressive US Durable Goods Orders report also reduced the appeal of the US Dollar and helped the ‘Kiwi’ advance.
According to one industry expert, ‘Overall we’ve seen a general weakness in the US Dollar stir buying in the Kiwi. Investors are feeling a little bit more confident that the US aren’t going to start raising interest rates as early as some were expecting, which was still next year.’
However, he added that the strength of the domestic currency could become a concern for the Reserve Bank of New Zealand, and that the central bank will ‘be watching it closely because it is starting to look concerning. We’re only a cent off post-float highs around 88.50 cents.’
Later today movement in the New Zealand Dollar to US Dollar exchange rate could be caused by US initial jobless claims and personal spending figures. Investors will also be focusing on the release of New Zealand’s Trade Balance report.
During European trading the Pound to New Zealand Dollar (GBP/NZD) exchange rate fluctuated as the BoE’s Financial Stability report outlined measures for cooling the UK’s overheating housing market.
Further statements will be made in the hours ahead so additional GBP to NZD volatility can be expected.
UPDATED 06:25 GMT 27/06/2014
Pound to New Zealand Dollar Exchange Rate Reacts to Trade Report
While the Pound continued to derive support from yesterday’s Bank of England Financial Stability report, the Pound to New Zealand Dollar exchange rate dipped below 1.94 as investors snapped up the ‘Kiwi’ after New Zealand’s trade report was published.
According to the latest statistics, New Zealand recorded a seventh consecutive trade surplus in May month-on-month – largely as a result of increased demand for New Zealand’s dairy produce. Last month the trade surplus came in at $285 million in May. On an annual basis New Zealand posted a trade surplus of $1.37 billion, quite a turn around from the $901 million deficit of May 2013.
The New Zealand Dollar also strengthened against the US Dollar, dancing within touching distance of a record high against the US Dollar.
Today’s final first quarter growth data for the UK could inspire additional movement in the Pound to New Zealand Dollar exchange rate.
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,0.8765,
New Zealand Dollar,,Euro,0.6431,
New Zealand Dollar,,Australian Dollar,0.9321,
New Zealand Dollar,,Pound Sterling,0.5163,
US Dollar,,New Zealand Dollar,1.1410,
Euro,,New Zealand Dollar,1.5549,
Australian Dollar,,New Zealand Dollar,1.0726,
Pound Sterling,,New Zealand Dollar, 1.9378,
[/table]
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