Dairy Auction Hopes Shore up ‘Kiwi’ (NZD) Today as Risk Aversion Declines
Market risk aversion is abating somewhat this morning, allowing the ‘Kiwi’ (NZD) to begin appreciating against the majority of the majors. Traders appear optimistic in advance of tonight’s GlobalDairyTrade auction, with another increase in dairy values likely to bolster the South Pacific currency further. At present the GBP/NZD exchange rate is slumped around 2.664.
Earlier…
As the Chinese economy has slowed to its lowest rate of growth in six years the GBP/NZD exchange rate is making gains today, unimpeded by weaker UK housing data.
Positive New Zealand Inflation Printing Weighed on GBP/NZD Pairing, Hawkish Bank of England (BoE) Comments Spurred Uptrend
While economic data from the UK was a little thin on the ground ahead of the weekend the Pound (GBP) was given a boost by a generally hawkish speech from Monetary Policy Committee (MPC) member Kristin Forbes. Suggesting that fears of slowdown in emerging-market economies and the wider global economy as a whole were overly pessimistic, Forbes implied that she would be more willing to vote for an interest rate increase in the near future. With the nine-member MPC looking increasingly split on the matter of monetary policy pundits are becoming more hopeful that the Bank of England’s (BoE) first move on interest rates will come sooner rather than later.
The ‘Kiwi’ (NZD), meanwhile, had been bolstered on Thursday by a stronger than expected printing on the third quarter New Zealand Consumer Price Index. Domestic inflation remained at 0.4%, rather than falling to 0.3% as had been forecast, to indicate that the New Zealand economy is not slowing quite so far as traders thought. As this potentially lowered the odds of the Reserve Bank of New Zealand (RBNZ) opting to slash interest rates the South Pacific currency saw an increase in demand.
Mixed Chinese Data Fails to Support ‘Kiwi’ (NZD) Today, Pound (GBP) Making Gains despite Slowed House Prices
In spite of the New Zealand Services PMI for September demonstrating improvement on the month, rising from 58.5 to 59.3 and offering further evidence of economic robustness, the ‘Kiwi’ has entered a general downtrend on Monday morning. This is likely due to the rather mixed market reaction which greeted the release of the third quarter Chinese GDP, which was revealed to have only slowed to 6.9% rather than 6.8%. Although this was stronger than forecast the figure still contracted to a six-year low, with some economists even doubting the veracity of this data, to prevent markets from experiencing a particular rally on risk appetite.
This morning also saw the UK Rightmove House Price reading for October decline on the year, falling to 5.6% from 6.4%. Though this did not bode especially well for the health of the domestic housing market the GBP/NZD exchange rate has nevertheless remained on an uptrend today.
GBP/NZD Exchange Rate Forecast: Diary Auction Price Rise Could Spur ‘Kiwi’ Rally
Later in the week the GBP/NZD conversion rate could experience further volatility with the publication of the latest New Zealand Credit Card Spending figure. Should this indicate a healthier trend in spending amongst domestic consumers the ‘Kiwi’ could produce a rally. However, the greater cause of movement for the South Pacific currency will be tomorrow evening’s GlobalDairyTrade auction. If dry milk prices continue to show improvement then demand for the New Zealand Dollar is likely to experience another surge.
Wednesday’s Public Sector Net Borrowing figure may see the Pound strengthen further, particularly if government debt is shown to have narrowed after August’s disappointingly wide 11.3 billion Pound deficit.
Current GBP, NZD Exchange Rates
At time of writing, the Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate was climbing in the region of 2.2689, while the New Zealand Dollar to Pound Sterling (NZD/GBP) pairing trended narrowly around 0.4405.
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