Yesterday the Pound softened against several of its major rivals in response to disappointing BBA mortgage approvals data.
However, the GBP to NZD pairing closed Australasian trading in a stronger position.
Overnight New Zealand’s ANZ activity outlook and NBNZ business confidence indexes were published.
Both measures showed a decline.
The activity outlook gauge slumped from 52.5 in April to 51.0 in May while the business confidence measure slid from 64.8 to 53.5.
The nine per cent drop in confidence reflected concerns regarding the strength of the local currency and falling dairy prices (dairy products are New Zealand’s main export).
While construction was the strongest performing sector (with a reading of 63 per cent, down from 65.4 per cent in April) agriculture put on the weakest show after dropping to 30.6 per cent (sliding by 12 points).
According to ANZ chief economist Cameron Bagrie; ‘Economic momentum is clearly easing. All up, it’s of little surprise to see most survey indicators nudging lower but still well north of ‘average’, implying we’re still in an economic sweet-spot’.
The ‘Kiwi’ softened against its currency counterparts after the report was released.
However, the currency also experienced movement as the Fonterra Cooperative Group Ltd (the largest dairy product producer in the world) revised its projected payout for the current season. Fonterra cut its 2014-15 price to 8.40 New Zealand Dollars, a 25 cent reduction.
The development prompted this response from economist Con Williams; ‘On the face of it, the decline in the payout between years is a drag on the economy over the coming year, but that dynamic is exaggerated. The coming year’s payout will still be the fourth highest on record, and from a spending point of view farmers will be in a similar cash-flow situation.’
Meanwhile the Pound was trading in a narrow range due to a lack of influential UK data.
Yesterday the British Bankers’ Association mortgage approvals report showed an unexpected decline, alleviating some of the pressure on the Bank of England to revise fiscal policy and causing Sterling to soften.
The Pound has since recovered declines against the New Zealand Dollar but remains slightly weaker against the US Dollar and Euro.
In the next few hours modest Pound movement could be occasioned by the UK CPI reported sales figure for May.
A reading of 35 is expected to follow April’s 30 result.
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,0.8506,
New Zealand Dollar,,Euro,0.6265,
New Zealand Dollar,,Australian Dollar,0.9220,
New Zealand Dollar,,Pound Sterling,0.5081,
US Dollar,,New Zealand Dollar,1.1714,
Euro,,New Zealand Dollar,1.6015,
Australian Dollar,,New Zealand Dollar,1.0869,
Pound Sterling,,New Zealand Dollar, 1.9732,
[/table]
Comments are closed.