Yesterday we discussed forecasts that the GBP/NZD exchange rate would soften further as the year progressed and overnight evidence of the ‘Kiwi’s future bullish relationship with the Pound emerged.
While slightly disappointing card spending data for New Zealand briefly took the shine off the ‘Kiwi’ the commodity-driven asset went on to enjoy a considerable rebound as a result of developments in China.
Although economists had expected retail card spending in New Zealand to increase by 0.6 per cent in January month-on-month, it actually declined by 0.5 per cent as the value of clothing sales plummeted and outlay on durable items dropped by 1.3 per cent.
But the New Zealand Dollar surged against peers like the Pound and Euro as the trade outlook for South Pacific nations like New Zealand and Australia brightened considerably.
China’s 10.0 per cent year-on-year gain in imports in January smashed expectations for an increase of 4.0 per cent.
Similarly, exports jumped by 10.6 per cent on an annual basis at the start of the year rather than climbing the meagre 0.1 per cent forecast.
While some industry experts are questioning the validity of the data, according to TVNZ, Westpac strategist Imre Speizer said of the result; ‘More of our milk powder and other things are going to China and better trading there is better for us. It’s good for the currency’.
The ‘Kiwi’ was additionally supported by the hawkish remarks delivered by Federal Reserve Chairman Janet Yellen.
Emerging-market assets were broadly boosted as Yellen stated that the current policy adopted by the Federal Reserve would remain in place. She intimated that easing would continue being tapered in ‘measured steps’ and that the employment sector still needs considerable support.
As the day progresses the publication of the highly anticipated Bank of England inflation report is likely to trigger considerable Pound movement.
The GBP/NZD pairing could also be affected by today’s Business NZ performance of manufacturing index.
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,0.8350,
New Zealand Dollar,,Euro,0.6119,
New Zealand Dollar,,Australian Dollar,0.9225 ,
New Zealand Dollar,,Pound Sterling,0.5073 ,
US Dollar,,New Zealand Dollar,1.2006 ,
Euro,,New Zealand Dollar,1.6312 ,
Australian Dollar,,New Zealand Dollar,1.0838 ,
Pound Sterling,,New Zealand Dollar, 1.9689 ,
[/table]
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