Prior to the publication of the UK’s Services PMI for June, the Pound to New Zealand Dollar exchange rate was little changed, having climbed yesterday in response to falling dairy prices and better-than-forecast UK construction figures.
On Wednesday the GBP to NZD pairing achieved a high of 1.9609 as investors ditched the ‘Kiwi’ after learning that the price of dairy (New Zealand’s biggest export) had dropped to an 18-month low.
The appeal of the Pound was also bolstered by an impressive UK Construction PMI, and the Sterling to New Zealand Dollar exchange rate was trending higher for much of the day.
During Australasian trading some ‘Kiwi’ fluctuations occurred in response to developments in Australia and China.
Firstly, Australia’s retail sales declined unexpectedly in May, dropping by 0.5% month-on-month rather than stagnating as expected. The Reserve Bank of Australia also issued remarks referring to the ‘overvalued’ nature of the Australian Dollar, which pushed the asset lower. The New Zealand Dollar was consequently able to record a considerable advance against its ‘Aussie’ rival.
The ‘Kiwi’ was additionally supported by China’s Services and Composite PMI gauges.
The measures came in at 53.1 and 52.4 respectively, up from readings of 50.7 and 50.2 in June.
As both results were an improvement, and both were well clear of the 50 mark separating growth from contraction, the data bolstered the prospects of nations with strong trade links to China – including New Zealand.
The New Zealand Dollar put on a moderately stronger performance against several of its peers, causing industry expert Grant Williamson to comment; ‘We’ve seen a bit of strength in the offshore markets and the New Zealand market has followed suit after a period of a little bit of weakness in the market in recent days, so it’s nice to see a turnaround. We’re starting to see bargain hunters coming back into this market, trying to pick up some of those stocks that have shown a fair amount of weakness.’
During the European session the Pound also took a hit in the form of a disappointing Services PMI for June.
As this week’s construction and manufacturing PMI reports had come in considerably higher than expected levels, investors had been hoping that the services data would also surprise to the upside.
However, the measure actually came in at 57.7, down from 58.6 in May and lower than the forecast result of 58.3.
Similarly, the Composite PMI slid from 59 to 58 in June, a more considerable drop than the 0.4 loss anticipated.
The Pound slid against the majority of its peers after the data was published, sliding by 0.1% against the New Zealand Dollar (GBP/NZD).
Further market movement could be occasioned by the US employment data and the European Central Bank’s policy meeting.
Before the weekend, a lack of pertinent UK or ‘Kiwi’ reports could restrain 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,0.8758,
New Zealand Dollar,,Euro,0.6411,
New Zealand Dollar,,Australian Dollar,0.9350,
New Zealand Dollar,,Pound Sterling,0.5105,
US Dollar,,New Zealand Dollar,1.1415,
Euro,,New Zealand Dollar,1.5590,
Australian Dollar,,New Zealand Dollar,1.0705,
Pound Sterling,,New Zealand Dollar, 1.9583,
[/table]
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