Economic data from New Zealand might be a little lacking at the moment, but movement in the commodity-driven currency has been inspired by global developments.
While the ‘Kiwi’ was trading in a fairly narrow range against the Australian Dollar, it was able to strengthen against both the Pound and ‘Greenback’ before the close of local trading.
Several factors aided the New Zealand Dollar’s advance.
Firstly, investors rediscovered their interest in higher-risk assets after Russia’s President Vladimir Putin lowered the odds of an invasion of Ukraine occurring.
Secondly, some positive reports emerged from New Zealand’s two largest trading partners, China and Australia.
China’s manufacturing reports may have been a little hit and miss last week, but the services sector of the world’s second largest economy is performing comparatively well.
The latest Chinese HSBC/Markit services PMI measure produced a reading of 51.0, up from 50.7 the previous month and moving steadily away from the 50 mark separating growth from contraction.
However, while the service sector appears to be experiencing steady growth, the slowdown in the manufacturing sector is having an impact.
Economist Hongbin Qu released the following statement with the figures; ‘The HSBC China Services PMI suggests that service sector growth seems to be stabilising at a relatively low level. However, combined with the weaker manufacturing PMI, this overall strength of economic growth is moderating and this is starting to weigh on employment growth. Beijing policy makers can and should fine-tune policy to avoid growth deceleration in the first half of the year.’
That being said, on the surface the Chinese data was positive and it helped the ‘Kiwi’ rally.
The New Zealand Dollar was also boosted by the news that Australia’s economy expanded by more-than-forecast in the fourth quarter of 2013.
As New Zealand’s economic performance is tied to that of its neighbouring country, the news that Australia’s economy expanded by 0.8 per cent in the fourth quarter (rather than the 0.7 per cent expected) enhanced the ‘Kiwi’s appeal.
Separate data had shown that Australia’s AiG performance of service index surged from 49.3 to 55.2, storming well above the elusive 50 mark.
The New Zealand Dollar was little affected by a domestic value of buildings report, which showed a 1.0 per cent decline rather than the gain of 3.1 per cent expected.
During European trading the ‘Kiwi’ continued to trade higher against the Pound even as the UK’s services index showed stronger-than-predicted growth.
Overnight the publication of the Federal Reserve’s beige book and the release of Australian retail sales/trade balance data could have an impact on the New Zealand Dollar.
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,0.8405,
New Zealand Dollar,,Euro,0.6112,
New Zealand Dollar,,Australian Dollar,0.9369 ,
New Zealand Dollar,,Pound Sterling,0.5038,
US Dollar,,New Zealand Dollar,1.1913 ,
Euro,,New Zealand Dollar,1.6337 ,
Australian Dollar,,New Zealand Dollar,1.0674 ,
Pound Sterling,,New Zealand Dollar, 1.9845,
[/table]
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